The forthcoming budget.
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The forthcoming budget.
The House of Commons library published Briefing Paper CBP-5091 yesterday, relating to annual and lifetime allowances for savings held within a pension ‘wrapper’. The timing of the release might be coincidental.. but I doubt it! Clearly, the scene is being set for further changes, speculating on what they might be has become a pointless annual game.
I know that serving medical professionals are already highly focused on what’s going on, pages 41-44 briefly refer to the impact on the NHS and the Armed Forces. In itself, that final parting shot might provide succour.. it might not. Worrying times for all concerned. The briefing paper, valuable reading -
http://researchbriefings.files.parli...01/SN05901.pdf
I tweeted this, just yesterday morning.
<<Just chatting with a very senior client. “The biggest existential threat to military medical capability right now is the issue of the annual and lifetime allowance.” Your specialists will leave by the dozen, @GavinWilliamson, if you continue to dump £20k tax bills on them.>>
I know that serving medical professionals are already highly focused on what’s going on, pages 41-44 briefly refer to the impact on the NHS and the Armed Forces. In itself, that final parting shot might provide succour.. it might not. Worrying times for all concerned. The briefing paper, valuable reading -
http://researchbriefings.files.parli...01/SN05901.pdf
I tweeted this, just yesterday morning.
<<Just chatting with a very senior client. “The biggest existential threat to military medical capability right now is the issue of the annual and lifetime allowance.” Your specialists will leave by the dozen, @GavinWilliamson, if you continue to dump £20k tax bills on them.>>
Hi Al,
Has the limitation of the public pension not actually being a "pension saved from pay" ie, it is not cash in a bank, been explored fully? I think one huge restriction is, that a public pension cannot be accessed as cash, or drawn down etc. The limitations upon a public pension that favour the taxman could be argued as leverage towards a higher lifetime allowance. Cheers
OAP
Has the limitation of the public pension not actually being a "pension saved from pay" ie, it is not cash in a bank, been explored fully? I think one huge restriction is, that a public pension cannot be accessed as cash, or drawn down etc. The limitations upon a public pension that favour the taxman could be argued as leverage towards a higher lifetime allowance. Cheers
OAP
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Al,
for the unwashed, will this affect those below the higher earnings threshold? What sort of salary do you need to be looking at before the potential/proposed changes become a factor?
Increasingly demonstrating that having your OWN pot, to decide how to divvy up, be that into ISA, investments, or a traditional pensions scheme (which can potentially be SIPPed if necessary at a later stage) is the only way to protect your accrued wealth. As suggested by Easy Street.
We seem to be increasingly mugged off by the government whom don't seem to understand, or dont want to understand, the stampede for the exits that is occurring amongst the highest skilled personnel in our armed forces.
for the unwashed, will this affect those below the higher earnings threshold? What sort of salary do you need to be looking at before the potential/proposed changes become a factor?
Increasingly demonstrating that having your OWN pot, to decide how to divvy up, be that into ISA, investments, or a traditional pensions scheme (which can potentially be SIPPed if necessary at a later stage) is the only way to protect your accrued wealth. As suggested by Easy Street.
We seem to be increasingly mugged off by the government whom don't seem to understand, or dont want to understand, the stampede for the exits that is occurring amongst the highest skilled personnel in our armed forces.
I don't own this space under my name. I should have leased it while I still could
OAP, one of my public pensions has an item each year saying how much it is in relation to the pot. I don't recall seeing a figure for my Service one.
Hi Pontious,
I think if you look on your statement of your last yearly pension payments from the Gov, somewhere after the amount it gives the % of the lifetime allowance. Now, I think that refers to your "pension pot" (theoretical for public pension) at the time you received your pension. However, I know that there are/were reserved rights on this and the allowable lifetime allowance has been changing fast but, I don't understand the detail of that, sorry!
OAP
I think if you look on your statement of your last yearly pension payments from the Gov, somewhere after the amount it gives the % of the lifetime allowance. Now, I think that refers to your "pension pot" (theoretical for public pension) at the time you received your pension. However, I know that there are/were reserved rights on this and the allowable lifetime allowance has been changing fast but, I don't understand the detail of that, sorry!
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Well, we all are getting older, and we all have to pay for the NHS...despite having paid for it already. 
https://www.ft.com/content/cf9ce278-...4-33d6f82e62f8
https://www.ft.com/content/cf9ce278-...4-33d6f82e62f8
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Hi Al,
Has the limitation of the public pension not actually being a "pension saved from pay" ie, it is not cash in a bank, been explored fully? I think one huge restriction is, that a public pension cannot be accessed as cash, or drawn down etc. The limitations upon a public pension that favour the taxman could be argued as leverage towards a higher lifetime allowance. Cheers
OAP
Has the limitation of the public pension not actually being a "pension saved from pay" ie, it is not cash in a bank, been explored fully? I think one huge restriction is, that a public pension cannot be accessed as cash, or drawn down etc. The limitations upon a public pension that favour the taxman could be argued as leverage towards a higher lifetime allowance. Cheers
OAP
The Lifetime Allowance is a Regulator on Saving vs Spending. Yes, we all know that setting aside tax relief costs money, but in itself that draws in business to the UK, and of course, retirees tend to spend in local goods and services, which translates into jobs and liquid cash which gets churned and washed around the economy quickly, instead of younger people who tend to spend into illiquid organisations paying down, for instance, their mortgage. There is a school of thought which regards the lifetime allowance as facile, or unreasonably low, and I’d go along with that.
Could it change? Absolutely - it’s just a tap which has changed often over the past ten years. Will it? I don’t think so. I think we’ll see a further (modest) reduction in the annual allowance and a cap on the amount of tax free cash that may be drawn when benefits are taken. We could also/instead see a change in the factors which value a pension at crystallisation (when you take benefits), but that’s unlikely.
Hope you’re well matey.
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Al,
for the unwashed, will this affect those below the higher earnings threshold? What sort of salary do you need to be looking at before the potential/proposed changes become a factor?
Increasingly demonstrating that having your OWN pot, to decide how to divvy up, be that into ISA, investments, or a traditional pensions scheme (which can potentially be SIPPed if necessary at a later stage) is the only way to protect your accrued wealth. As suggested by Easy Street.
We seem to be increasingly mugged off by the government whom don't seem to understand, or dont want to understand, the stampede for the exits that is occurring amongst the highest skilled personnel in our armed forces.
for the unwashed, will this affect those below the higher earnings threshold? What sort of salary do you need to be looking at before the potential/proposed changes become a factor?
Increasingly demonstrating that having your OWN pot, to decide how to divvy up, be that into ISA, investments, or a traditional pensions scheme (which can potentially be SIPPed if necessary at a later stage) is the only way to protect your accrued wealth. As suggested by Easy Street.
We seem to be increasingly mugged off by the government whom don't seem to understand, or dont want to understand, the stampede for the exits that is occurring amongst the highest skilled personnel in our armed forces.
How are you doing?
The calculations for a DB scheme aren’t as straightforward as those for a DC scheme (essentially, unless you can carry forward any unused allowance, it’s no more than £40,000 pa) but if you’re a Wing Commander, even gusting as low as Sqn Ldr in a tiny minority of cases, you’ll be wincing. But, it really does depend on personal circumstances.
I take your point about flexibility completely. Political risk is possibly, the biggest single threat of all currently. To savers and to the economy. Uncertainty inhibits commitment, investment and growth. Alas, the government appears set to continue ‘financial repression’ - essentially, keeping interest rates low whilst allowing inflation to nibble away at public debt.
And as as I said just now to OAP, AFPS offers you access to zero flexibility, although membership doesn’t cost anything (as such). I was at Ford UK in Essex earlier this week discussing their company DB scheme, and it was casually remarked that scheme members were going to be allowed the ability to partially transfer out. I have my concerns we’ll see an increase in sub optimal outcomes, and in an unguarded moment, I might let my innermost thoughts question wider motives, but it’s a ballsy move from a big, big scheme. I really hope other follow suit.
I tweeted after the meeting that it was happening, and all hell broke loose - the Ford scheme had no idea of the significance of what they were doing. I broke the story, and the most I got was in the FT with a paltry quote. Good old (Aussi) Jo.
https://www.ft.com/content/f62ea6cc-...0f_XrUikAFQuAI
Well the link provides a depressing read. Both in terms of direction of travel and the usual commitment to as little as possible by the MOD to look after people or head off issues before they become crises. W
The problem is that it’s so damned complicated and the MOD does little to explain things, and if you talk to JPAC they are generally clueless. For instance, a few years back when they reduced the annual allowance to 40K/pa, I was told I had exceeded that one year and would have to carry over allowance from previous years. Fine, no tax bill, but I was a Sqn Ldr and it was just a routine year with nothing special I can recall. I was under the impression that it was Gp Capts upwards that would be hit, so God knows what will happen if they lower the allowance further. Morale is already fragile enough without mid-level people getting an extra tax bill for turning up to work!
But the question I have been mulling is just how do you calculate the annual pension value for tax allowance purposes? If you look in the worked examples of how the pension is calculate that were provided in the AFPS15 documents it’s simple - the annual input is 1/47 x salary plus indexation of previous years contributions. However the annual statements provided by JPAC - and which said I had overshot the limit as a baby Sqn Ldr - seem to use a completely different calculation and multiply the value given in the pension code by 20 and compare it to the previous year’s value. So which is the right way of doing it? And why the inconsistency of approach?
The problem is that it’s so damned complicated and the MOD does little to explain things, and if you talk to JPAC they are generally clueless. For instance, a few years back when they reduced the annual allowance to 40K/pa, I was told I had exceeded that one year and would have to carry over allowance from previous years. Fine, no tax bill, but I was a Sqn Ldr and it was just a routine year with nothing special I can recall. I was under the impression that it was Gp Capts upwards that would be hit, so God knows what will happen if they lower the allowance further. Morale is already fragile enough without mid-level people getting an extra tax bill for turning up to work!
But the question I have been mulling is just how do you calculate the annual pension value for tax allowance purposes? If you look in the worked examples of how the pension is calculate that were provided in the AFPS15 documents it’s simple - the annual input is 1/47 x salary plus indexation of previous years contributions. However the annual statements provided by JPAC - and which said I had overshot the limit as a baby Sqn Ldr - seem to use a completely different calculation and multiply the value given in the pension code by 20 and compare it to the previous year’s value. So which is the right way of doing it? And why the inconsistency of approach?
Shouldn't everyone who is a member of the AFPS scheme be sent this information as a matter of course?
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SAR Bloke. You need the APFS Form 12. Go to JPA Login page, select JPA Forms from left hand menu. Then select Armed Forces Pension Forms and scroll down to 'Pension Forecast Request (Form 12)'. You have to post the form to the address at the bottom of the form and you can do this once a year.
The last pension forecast I had didn't mention Annual Allowance let alone have any figures. I haven't really looked too closely and maybe it has the data for me to be able to calculate the numbers, but to me that isn't the point. If we are receiving a benefit that uses up our tax allowance (i.e. the Annual Allowance) then surely everyone should be told how much of that allowance we have used up? I have just managed to get in touch with the pensions tax department and they have told me that they will have the figures for the 17-18 tax year in Jan 19, which seems a bit late to me. I will have to ask them to provide me with this figure every year otherwise they won't provide it automatically, unless my AFPS pension alone breaches the Annual Allowance.
(As an aside I also don't understand why we have to apply for a pension forecast and why we aren't automatically provided with one).
(As an aside I also don't understand why we have to apply for a pension forecast and why we aren't automatically provided with one).
just a note - applied for a pension forecast a few months back - got a letter 2 weeks ago basically saying that "as we've had to do all the annual allowance calcs in less time than normal due to late pay award - you ain't getting your requested forecast"! It suggests using the online calculator which if it worked for my unusual circumstances would be fine.....but it doesn't. I thought we were entitled to one forecast a year but I guess that rule is being broken now.
just a note - applied for a pension forecast a few months back - got a letter 2 weeks ago basically saying that "as we've had to do all the annual allowance calcs in less time than normal due to late pay award - you ain't getting your requested forecast"! It suggests using the online calculator which if it worked for my unusual circumstances would be fine.....but it doesn't. I thought we were entitled to one forecast a year but I guess that rule is being broken now.
And even then a pensions forecast won't tell you how you are faring with regard to the annual allowance limits. Just a word of caution about the MOD calculator though - it quoted me as having a pensions bill payable at my 45% marginal rate of tax. Oh I wish I earned that much to have to pay 45% tax, but I don't. I'm therefore not sure how accurate it actually is.
