True, but the propensity of people who will be sitting on Malta drawing down their pension £10k per year will be relatively small. For most people, especially for people with normal/large pensions, the legislation won't make much difference at all. It's mainly for the people with pensions too small to generate a relevant income either because they have a final salary scheme or other assets they want to live off instead. IMO they should have just made the trivial commutation limit £80k instead of £30k and left everything else the same.
Is it naive to think that those most likely to benefit from the cracking open of pension pots are banks, other financial product providers and financial salesmen? Assuming that the average person who hopes to repot the money and see better growth will not be an expert in investment or playing the markets.
I believe there are a huge no of people in the UK with interest only mortgages. I expect a huge amount of the money will go to fix that issue. Getting a mortgage past 75 in the UK is hard to say the least.
Absolutely. Financial product providers and financial salesmen don't need a pension to be cracked open to sell any financial product at all. You can buy anything financial within a SIPP. What you can't buy is a nice car, or a cruise, or a shopping trip to Harrods. But they won't benefit either. It's the chancellor who'll benefit. All that money is taxable and the government's going to take back huge amounts of people's hard earned money because people think their pension isn't really theirs and it's a good thing to take the money and put it in their bank accounts.
Probably Cameron's friends in the City who get access to a large new pool of capital! No doubt a lot of new financial products are being dreamed up to get the fees and commissions rolling in.
I know it's fun to be Daily Mail-y but really you should read my previous post. Financial products fit inside pensions. City people will lose out from this. Tax revenue will go up though.
Don't you worry the City will not loose out - the products used for pension funding are highly regulated, now there will be a free for all- we can sell you anything from now on...
This is such a depressing post.
I'm not worried, but the City will lose out. Why do you think giving people extra money means they will suddenly rush to the City to invest it? What about this money means it will be treated exceptionally? This is how people spend their money http://creativeoverflow.net/the-uks-...s-infographic/
Pension money is already saved, releasing it is only negative for financial product providers. Investments within a SIPP aren't more regulated than investments outside a SIPP, all else being equal. The only winner here is the taxman, everyone else loses.
How are there any losers here? It's just the government has given extra choice to people. I would rather invest outside a pension any day, the additional costs exceed any tax relief given.
No no no.
The winners are those who'll trivially commute <£30k or above that with a bit of tax to pay. Maybe up to around £90k because under that it's tough to get any reasonable income out.
There are no costs to investing within a pension. (£200 a year maybe, sometimes less than that).
If you're a UK tax payer and you don't invest within a pension you simply don't understand what a pension is or you're planning on dying very young indeed.
Anyone setting up a pension, 40/30/20/15 years ago would have suffered huge costs over the lifetime of the pension. In most cases the fund would have been 30-50% bigger without charges applied.
Most funds have management charges & expenses, often in the region of 2% which on a non trivial fund will exceed £20,000 a year, rather than the £200 you claim.
Best avoid financial products, 90% of fund managers underperform the index they try to beat, & that's before pension wrapper expenses.
I have no idea what a fund has (necessarily) to do with a pension, nor do I know what the relevance of costs 20 years ago has to do with costs now. Right now, today, the most you have to pay to manage a pension is £200. You can fill it with stocks or bonds of the same sort you can buy outside of the pension except that if you add £6 to your pension, the government may contribute £4 or more depending on your marginal tax rate.
People cashing in pensions today will not have such low cost arrangements. 20 years ago the lowest pension management fund charge on top of any fund costs were 1%. Most funds at the time had a min bid/offer spread of 5%, any investments made over the first 2 years attracted annual charges of 7.5% for the life of the plan, later investments charges were 1.75% annually. Add crap performance. SIPP's are comparatively recent. Transferring to a SIPP from an older plan will attract large charges.
Be aware, the rules can change, my pension document says retirement can be taken from age 50, the government changed the rules it's now 55.
I know a few people moved UK pensions to CH & were charged roughly 7% advisors fee! for anyone interested Picted in Geneva don't charge anything if you go direct, so you can cut out the 'beer thieves'.
But they can now. They can transfer their current pension to a SIPP at no charge. Cashing in the pension just to invest it means they will be taxed at their marginal rate and could lose up to 40% of their pension in one hit. There's absolutely no point in doing that. Pensions used to be crap, no doubt - and many are still, crap and expensive. But the decision isn't whether to stay in a crappy pension or cash it in. There are low cost SIPPs and that where pension money should go rather than to be invested outside a pension wrap. £200 a year. Promise.
Your unaware there will be transfer penalties in most cases quite large possibly in the region of 10-30% of the fund value.
Nothing to stop people cashing in over a number of years, 40% tax payers would have paid 40% tax on pension income so really no loss especially so for 'not trivial' pensions.
I guess the problem is most pension advisors are young kids who have no idea of the pensions rules of pension annuity contracts allowing 30% cash free lump sum. Some such contracts even have annuity rates exceeding 11%
People drive to Wall Street in their Rolls Royce & get investment advise from someone who took the metro to work
Sorry, are we talking about annuities or pension funds?
I am talking about pensions, google is your friend As I said earlier young pension advisors today have no idea what happened before 1st July 1988, you just proved my point. It's otherwise known as a section 266 contract, the only possible pension you could take out if your employer did not have a scheme.
http://www.hmrc.gov.uk/pensioners/pe...retirement.htm
My daughter (15) is wondering why he can't afford a new red case, lol Maybe this is a solution.
Well aware of them, you can transfer them most if the time without penalty, some have very valuable guaranteed annuity rates and most importantly you didn't pension you had this sort of pension from the start - most people don't any more.
I would have thought that anyone coming up for retirement would very likely have a 226 plan. Personal pensions have been available for for less than 26 years.
If you really had known what a retirement annuity is, it's strange you asked if I was talking about a pension.........