Curious Orange
Punxsatawney Phil
Trouble is it didn't just affect corporate execs.
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[News] MPs defecting to The Independent Group in parliament
- Thread starter Leekbrookgull
- Start date
Trouble is it didn't just affect corporate execs.
drew
Drew
But do you think the tax payer should subsidise final salary schemes then?
Curious Orange
Punxsatawney Phil
What do you mean by subsidise? And which final salary schemes?
Brown withdrew the ACT tax credit from defined contribution schemes too. They’re the far less favourable schemes that tens of millions will rely on in their retirement.
Tax incentives have always been there to encourage everyone (with their employers too) to save for their retirement, rather than blow all their net earnings and rely solely on the state. All parties have always agreed on that.
jonny.rainbow
Well-known member
- Oct 29, 2005
- 6,606
After failing to turn up for Question Time yesterday, Anna Soubry appears for a tough gruelling interview on The Last Leg.
drew
Drew
Errrr, tax relief is effectively taking money out of the treasury isn't it?
Bold Seagull
strong and stable with me, or...
After failing to turn up for Question Time yesterday, Anna Soubry appears for a tough gruelling interview on The Last Leg.
Which I thought went quite well, showed her as a human being, I thought she was quite funny. Tactically the TIG have everything to gain from being ambiguous at the point, they probably are best avoiding diasastrous funny tinges for a while.
Dick Swiveller
Well-known member
- Sep 9, 2011
- 9,155
Thanks to that nice Eric Pickles, you are subsidising mine. So thanks for that.
Curious Orange
Punxsatawney Phil
No, it isn't, it's money not going into the Treasury in the first place. Contributions to pension funds have always been taxed just at a lower rate than if the money had been given direct to the employee. Note that you are also subject to income tax when you take income from a retirement annuity (or the relevant tax regime for how you choose to draw from the pot). What was new was that Brown chose to tax the funds as well.
Is it fair to pay tax on the same monies three times?
It’s certainly inefficient. I’d add up the three taxes and just apply the total once.
Curious Orange
Punxsatawney Phil
But would you rather do it on the way in and discourage investment in retirement, whilst it's in the fund and annoy prospective retirees about the size of their pension funds, or after they've retired and annoy them about the amount of tax they're paying?
drew
Drew
Is that right? I might be wrong but I always thought that, for example, if you paid £100 into a pension you paid 20% tax on that (£20) and then the pension provider claimed that back from the government so effectively there was £120 going into you pot. In other words, you haven't paid any tax on that £100 you earned. As for Brown's tax, wasn't that in relation to dividends that your pot earned so for example, your pension fund has a share and each year that share earns a dividend of £10. Before, that dividend would be subject to income tax (say 20% again) but the pension company would claim the tax back which would mean you would be adding £12 into your fund. Brown removed that relief so only the £10 is going into your pot.
When you receive your pension as income you pay tax on it but as you got tax relief in the first place then it is still effectively only taxed once. I can see how you might argue there is double taxation on the money in your pot that comes from the dividends earned but not sure how you can claim your money has been taxed three times?
If I put money aside for my future but not in a pension I would be taxed on my earnings and then taxed on interests/dividends, those savings make. Why should it be any different in a pension? Where I would benefit is that I wouldn't pay tax when I withdrew the money (but then I would have paid the tax at the beginning).
As for the alleged devastation caused, here's an extract from FactCheck:-
Burst bubbles
The chancellor imposed this measure because, at the time, company pensions were in much better health. The stock market was high and rising, and many schemes were in credit. Since the dot-com bubble burst, those schemes which had invested their assets in the stock market saw their value plummet. This caused far more damage to their financial health than Gordon Brown ever could.
And, as FactCheck pointed out last year, Gordon Brown wasn't the first chancellor to use this source of funding. Although Gordon Brown was the one who abolished ACT, one of his predecessors had already taken a chunk out of it: Tory Chancellor Norman Lamont cut the rate of ACT from 25 to 20 per cent in his 1993 budget.
So, while Gordon Brown did change the tax regime in a way that disadvantaged pensions, the impact of his changes has been much exaggerated.
http://www.channel4.com/news/articl...k+did+gordon+destroy+our+pensions/171020.html
beorhthelm
A. Virgo, Football Genius
- Jul 21, 2003
- 35,300
you pay in £100, there is £100 going into the pot. no tax is paid.
the effect of the Brown policy was to take over £5bn out of pensions in the first year, rising each an every year since.
drew
Drew
I might have worded it better. From the Which website:-
If you are a basic-rate taxpayer and were to contribute £100 from your salary into your pension, it would actually only cost you £80.
The government adds an extra £20 on top – what it would have taken in tax from £100 of your salary.
Did you read the link posted earlier?
That £5b is still from money earned by the pension pot and not the pension pot itself.
BensGrandad
New member
The only time Corbyn has said anything sensible is that they shoulkd resign their seats and seek a by election. Mind he is only saying that because the majority are safe labour seat he wouldn't be saying it if they were marginals
Curious Orange
Punxsatawney Phil
To be honest I'm twenty years out of date on the regs as that's when I last worked on annuities.
It may be true what you said about the 20% taxed on the contribution being added to the pot, but it's not like the Treasury hasn't had the advantage of having had that money in its account before being re-claimed. I'm assuming this is the subsidie you refer to?
Does it irk me that companies offer better pensions to their execs than the rank and file, yes, of course.
Do I think that government should encourage saving for retirement, yes.
It may be true what you said about the 20% taxed on the contribution being added to the pot, but it's not like the Treasury hasn't had the advantage of having had that money in its account before being re-claimed. I'm assuming this is the subsidie you refer to?
Does it irk me that companies offer better pensions to their execs than the rank and file, yes, of course.
Do I think that government should encourage saving for retirement, yes.
midnight_rendezvous
Well-known member
So, that wildly popular socialist manifesto that increased those labour marginals by thousands of votes wasn’t sensible?
Thunder Bolt
Silly old bat
So, that wildly popular socialist manifesto that increased those labour marginals by thousands of votes wasn’t sensible?
They increased those thousands of votes because a lot of people thought Labour would oppose May and her Brexit stategy. Over 150,000 Labour members have left the party in the last few months when they realised that Corbyn is as much of a Brexiteer as the Tories.
midnight_rendezvous
Well-known member
Everyone knew that Corbyn was a leaver, so it shouldn’t exactly be a shock to anyone. To claim that the huge surge in votes was purely based on opposing Brexit and not the aforementioned wildly popular manifesto is simply wrong.
Thunder Bolt
Silly old bat
He said he voted Remain, so if you knew he was a leaver, then that makes him a liar. Have you noticed his body language when he talks? He blinks all the time, which is well known to be a sign of lying.
Irony.
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