How is your SIPP

That is certainly true, but there are very large numbers if people in the private sector who are just as underpaid as many in the public sector. They still get rubbish pensions as many employers offer only the bare minimum ‘auto-enrolment’ scheme that the law obliges them to provide.

Without straying into politics, ‘the law’ could of course require something better. It just needs the will to see beyond the next five years.

AC – the way I unpick your question is:

1- in days of yesteryear, DB pensions were ‘perks’ for careerists, offered widely across the private (funded) & public sectors (rarely funded) at all levels. (some) Incomes in relative terms were softer to reflect this. The cost to the corporate/public purses was manageable (see on), generally based on 480/720 models.

Of course, some major businesses like BT, Royal Mail and others have crossed over.

2- the cost of providing these DB terms has escalated massively in the private sector, and to a degree in the public sector, due to:

a- actuarial updates on life expectancy et al
b- the yields from annuities have collapsed, reflecting (a) but also investment returns on assets are now far lower than yesteryear (e.g. when Base Rate was 5%++). I recollect when you could buy an annuity return (with some inflation protection) of ~£3.5k pa from £50k i.e. to get an income of £40k p.a., the cost would require a fund of ~£670k. As market annuity yields have fallen (~50% from above), the required pension maturity cost is 2x (yikes).

The latter has weighed heavily on the profitability of some corporates, causing then to either close and/or re-work the benefits offered (generally done by 2012/13). Meantime, some unfunded public schemes appear to have sailed through untouched, with the costs of same being all due ‘tomorrow’.

c- overlaying the sector incomes, fair to say financial and public sector rewards which are pensionable have escalated more than others.

Those exposed to DC arrangements have been affected the worse by a long, long way, as many simply cannot generate the surplus capital from income to match to the ‘values’ of a DB pot – and the tax regime hasn’t helped them given tapering. Plus, the volatility of the stock and investment markets has become more profound e.g. from the above maths, a target retirement income would require a DC pot of ~£1.3m, which until a few days ago would have exposed someone to an LTA tax deduction on this of ~£57k, so you’d need even more on a post tax basis!!

That’s some going, especially as many don’t start contributing materially until their late 30s (post family etc).

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I don’t know about GPs pensions specifically, but other employees including managers, hospital doctors, nurses, physios etc have always been able to opt out of NHS pension schemes, and rejoin later within a few years, though several legacy schemes have ended as of April 2022, and while employees retain accrued benefits in those they can only contribute to the current ‘2015’ scheme now.

The issue I mention in an earlier post is probably bigger than being able to opt in/out - it’s the fact that pension input cannot be readily controlled or predicted by the employee, and this is where AA taxation coupled with reduction of LTA (until the budget) has put the cat amongst the pigeons in recent years.

At one point AA was (from memory) £255,000 which would have been quite unlikely to affect higher paid NHS workers, but as soon as AA was dropped to £50,000 then £40,000 it started catching many as ‘carry forward’ had been exhausted and quite small pay rises coupled with using different CPI rates to revalue the ‘pot’ within a tax year (CPI disconnect) could have unpredictable results - artificially high growth when inflation changed suddenly the wrong way some years and also poor/negative growth in others.

Many were caught out by the CPI disconnect as when there was no or minimal salary increase, they assumed ‘pot’ growth would be fairly stable and comparable to the preceding year but CPI changes could make those assumptions completely wrong.

Due to pension reforms most were on current or current and legacy schemes, and a further complication was that negative growth in one scheme could not be offset against positive growth in another part of the scheme, reducing AA carry forward. This and the CPI disconnect have I believe been remedied now which should help.

If you’re still ‘in’ a scheme, pension contributions are automatic for the pensionable components of the pay, paid at a tiered rate which rises with salary.

The only way to reduce the pension input if likely to breach AA is either to do less pensionable work (going part-time/reducing hours essentially) or leaving the scheme (+/- rejoining for part of the year).

Perhaps some of these factors affect private company pensions too, I’m not sure, but it seems crazy that those who manually invest in a personal pension arrangement can control what they put in up to the AA if they want to avoid AA charges, whereas those in public sector schemes with higher pay simply get pulled into AA tax often without their knowledge/control.

So many of these things should be quite simple to remedy and it’s bizarre that they haven’t been ‘fixed’.

It seems such a shame that our education system doesn’t provide youngsters with some of the hard facts about pensions and saving for later life.

As you suggest it’s simply not on the radar for so many in their 20s/30s or even older especially when other commitments (particularly these days) leave little disposable income to consider investing.


Sadly, this is all what happens when the uninitiated (a polite word for ‘not very worldly wise’), interfere with things without a thorough and wide-ranging impact analysis…and then they double-down. See $, want $.

I know some in the private sector (ex work colleagues) renegotiated reward packages once their ‘pots’ were topped-out vis LTA, with some using SIPPs (IHT drivers too) in addition to their DB entitlements. Of course, there are many judgements around ‘value’ and subjective needs looking ahead, allied to an individual’s tax profile.

Some even transferred out from their DBs, especially where a partner had similar arrangements, kinda hedging bets for the family unit and IHT.

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I don’t know enough to answer definitively - the short answer is that annuity rates were much higher until around 2008, and they were very high in the 70s and the reduction in interest rates in the last 15-20 years or so has hit annuity rates very badly.

But definitively speaking is tricky because I can remember when you weren’t allowed to put anywhere near as much into a DC pension as you can now (under retirement annuity contracts you could put in fixed % of earnings, which I think may have increased with age), and there were no controls on DB pension other than final salary x a fraction. HMRC set max fractions being the 1/80 plus 3/80 or 1/60 which were the trad pension fractions for nhs, teachers etc. so the limits were all on what went in. Now the AA controls what goes in, and LTA controls what comes out. Which is potentially quite harsh

I did find a publication by the LSE UK Annuity Rates and Pension Replacement Ratios 1957 - 2002 which shows the relationship annuity rates and gilts in an interesting chart near the end

As an aside (which may or may not be interesting to anyone :wink:) I can remember auditing the post office pension fund in I think 1986 and the rate of wage rises was so far below inflation that some retired pensioners (whose pensions were index linked) were receiving pension at levels approaching what the equivalent employees were earning


Just to update the Mr Lineker question.

@GaryLineker (he) has won his tax battle against HMRC after a judge concluded he had been wrongly accused of underpaying £4.9m in tax”

Was always likely to be the conclusion. The Lorraine Kelly case set the precedent.

Though having read a brief summary I like that even the judge says his findings may appear inconsistent. But they’re not. He says.

I did enjoy the Lorraine explanation. When she is on the telly it’s not her at all. She performs as a character that’s a bit like Lorraine Kelly but it’s not the same person. I may be embellishing a bit, but I wonder if I could get away with the same subterfuge in my daily endeavours and avoid a bit of tax. I suspect not.


Yes the TV version of Lorraine is not Lorraine. It’s another Lorraine.

I always felt that if only she was replaced by Clare Balding.

Then, just like in the song, “I can see Clare, now that Lorraine has gone”


Interesting to see that Eamonn Holmes has just lost his appeal against HMRC. The upper tribunal deciding he was actually employed by ITV and so couldn’t claim to be freelance and consequently reduce his tax bill. I wonder how the likes of Linneker and Kelly have managed to argue otherwise? Perhaps HMRC will feel fresh impetus to revisit those particular situations.

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As IR35 has been out there for ~22+ years (or thereabouts IIRC), you’d have thought they’d have ironed-out the bugs and allowable practices by now, but seems not. It’s so highly nuanced, especially in media circles, and it seems that Holmes’ case may have turned on the terms of his contract? And, let’s not forget, it’s just not an employee-side issue, noting the BBC a few years back appear to have forcibly changed the employment status of many of their higher-earners (saving NI) – which HMRC pounced upon.

There are suggestions in the media that HMRC will re-challenge the Lineker adjudication/judgement.

It’s a right old porridge out there as e.g. many courierco’s dictate their drivers are self-employed – and, IIRC, Royal Mail have moved to/made proposals for their delivery drivers to move to self-employed status.

It’s not how much you earn but how expensive your lawyers are.

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Seems that way doesn’t it.