Hmm…let’s wait and see the fuller words.
All those sat ‘uncrystallised’ will likely be happy – but the volte-face here is staggering.
It’s an unfair, sneaky additional tax in the first place. It may only have affected the ‘wealthy’ for the most part so far but more people would have been sucked into it over time and they’re already paying income tax on their ‘tax free’ pensions when drawing, so always seemed a bit harsh.
Tbf, we’ve long thought it can’t last and at the very least would have to go back up again at some point, so were very surprised when it was capped for 5 years last year, more so than abolishing it now frankly.
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A little confusing - I’m assuming no LTA charge from April 2023 but LTA officially removed in future legislation from April 2024?
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The tax free lump sum is apparently to be fixed at its current maximum of £268,275. Fixed indefinitely I wonder or perhaps increased in line with inflation in years to come. Naturally they might reduce it or even tax it before too long!
25% tax free of a huge pot would not look good I suspect.
I saw that mentioned, unfortunately I have no idea what it is yet!
Ignoring politics, it is utterly staggering how they have completely flipped 180 on LTA.
So many people will have said enough’s enough and taken their pension early as at/over LTA, while others will have deliberately tried to avoid going over the limit in recent years.
So maybe best of both worlds for those who did nothing, but others will have modified their behaviour quite significantly over many years or even retired.
Doesn’t matter who’s in power they all seem to move the goalposts when you least expect it - such a shame when people are expected to plan years in advance for their later years.
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I believe it’s frozen indefinitely but info. is dripping out.
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Good to see the LTA removed and the maximum annual contribution increased to £60k, but frustrated that the taper allowance doesn’t seem to have changed. Having not paid much into my pension when I was younger (low salary and time abroad) I’m unable to contribute much more than £4k a year due to the taper relief restrictions. The LTA and maximum contribution changes therefore have no benefit to me. At this rate I will retire with a very small pension.
Just read that the minimum taper relief allowance has been increased from £4k to £10k, so some good news, though that still makes it impossible to build a sufficient pension pot to get anyway near the old LTA.
The more I reflect on this, the more I’m convinced that these changes benefit public sector workers on DB pensions far more than private sector workers on DC schemes where taper relief will stop higher earners from benefiting from the removal of the LTA. Sigh…
ISA’s ??
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Presumably, if the taper comes in to play it just means that the £60,000 can still be put into the pension, but it just won’t attract tax relief. Which seems pretty fair really, if someone is earning that much, and they can still build up their pension pot.
Little benefit from paying into a pension if you don’t get tax relief on the way in. You would be taxed at 45% into the pension and then taxed again when you draw it down (let’s assume at 40% and ignoring any tax free lump sums, but this obviously depends on your retirement income level), so that’s an effective tax rate of 67%. If you then buy something with your pension income that has VAT on it at 20%, you quickly realise that the effective tax rate is close to 80%! As @anon17748768 says, in such a situation it makes more sense to use ISA allowances or VCTs rather than pensions.
I appreciate that people earning higher salaries are in fortunate position, but I’m not sure it’s particularly fair that they can’t pay any significant amounts into a pension whilst getting any tax relief. Couple that with losing your personal allowance, at some point it starts to make you think about reducing the hours you work as the incremental income you earn becomes marginal versus the value of your time.
The whole pension system seems completely broken to me and I have no trust in future governments not raiding pension pots for tax. All rather sad as the government should be incentivising people to save for retirement.
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I fear you are correct here – and the maths of the accruals workings in some of the public sector DB schemes lead to the increase to £60k.
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The figures you’ve posted are no doubt correct, but they are only a snapshot of the tax situation of only a small proportion of the population. Presumably when they first started paying into a pension scheme they paid basic rate of tax. The majority of people won’t ever pay anything, but, basic rate tax. Added to the fact that the majority of most peoples pension fund is made up of employers contributions (free money), I doubt anybody would say the pension system is broken.
I think this is what the government should do now, somebody’s got to pay for the governments covid costs.
I’d take 1% from everybody’s pension fund. Nobody would notice that.
The Unions would.
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I’m not so sure about that brother.
Any communist worth his salt would think it’s a great idea. 
The challenge is that the taxes have to come from somewhere. It’s hard to feel sympathy for those fortunate enough to be in the situation you describe. If the taxes don’t come from them, who exactly should they come from?
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Don’t disagree HH. The watch-out for the government is that if they tax certain segments of the population too much that can lead to unintended consequences, such as people reducing the hours they work, retiring early, moving abroad etc. Plenty of evidence of exactly that happening with NHS workers, hence some of the pension policy u-turns today.
Anyway, we’re probably in danger of straying into politics, so I’ll leave it there.
All those similar to Gary Lineker who whine about shortage of funding for services at the same time as trying to pay as little tax and NI as possible, certainly at far lower rates than most of us.
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