Tax raid will close pension schemes
03
Dec
Price Waterhouse Coopers are warning that companies will close their final salary pension schemes if Chancellor George Osborne keeps changing the laws on pension schemes. The raids by Osborne on people’s retirement savings are damaging the workers’ confidence in the system and discouraging saving in the UK.
It is reported that Osborne will reduce the maximum amount people can place in their pension to £30,000 a year so that more of their income can be taxed. This move is clearly leading to more and more people losing faith in investing their money in a pension schemes.
Moreover, this move is contradictory since Ministers have often stressed on their wish to encourage more people to save. When asked about the rumoured move on pensions, Osborne said: ‘you will just have to wait and see’ but from what this rumour has already created, it seems such a move would lead to more loss for pension savers.
A cut in a person’s annual pension contribution to $40,000 would raise around $600 million per year for the Exchequer — while rising to £1.8 billion if it is decreased to £30,000.
PWC commented on this new tax raid, stating: ‘employers will further accelerate the closure of defined-benefit pension schemes as they become even more complex and expensive to run, and through fatigue with constant changes to the tax treatment’.
As a result of the endless interference on pension schemes by the government, as well as due to volatile financial markets and increased longevity, final salary schemes have declined significantly and unless the government decides to leave such schemes alone, pension savers will likely give up on the scheme, thus giving up on the hope of creating a financially stable future for themselves.
Nigel Green deVere group
Blog written November 3rd
Tags:
Pension schemes
Thanks for this info Nigel. In my opinion I don’t think there is any future in pension schemes as we know them. It seems crazy that the UK government want and need people to save for their retirement, yet remove incentives to do so.
I am absolutely livid about this chagne. It was bad enough when the first stage was announced. I was born on 7 June 1954 and I would have then retired on 6 September 2018. This in itself angered me especially as my cousin, who was born on 25 January 1954 and therefore 4 and a half months older than me, would have been able to retire 9 months before me. With the new chagnes, she can retire 11 months before me. What have I done to deserve this?I have 5 children and have been married for 34 years. I worked full-time until I had my children, who were born between the ages of 29 and 35. I then worked in the evenings whilst my children were at school and, in addition, was a childminder for 2 days a week. I took a few months only off work between each child. For the last 4 years I have been working full-time. I have a physical job as a Home Support Worker and have only ever been out of work once in my life, for about 3 months, when I claimed unemployment benefit. And my reward for all this is to be told that I have to wait another 6 years before I can retire. It’s bad enough to be told this when in one’s 20s but retirement is such a long way off that it seems like a lifetime away. Not so when you are in your 50s and the end of the tunnel is in sight. My husband is 4 years older than me so if I retire at 66 he will be 70. We both enjoy walking in the mountains in the Lake District, Skye, Wales and so on and were looking forward to so much more free time to do this when we retired. Some hopes!If this all goes ahead, there is no way that I am working until I’m 66. I will simply live at retirement level as far as my money is concerned until I’m about 63, putting away the extra into a savings account, and then, from the age of 63, use that to continue living at retirement level until I actually reach retirement age, whatever that may be by the time we reach 2020. No doubt the goalposts will have moved yet again!Of course, if I was David Cameron or any one of his moneyed associates, I could retire early but, as usual, we as the plebs have to pay for the greed and short-sightedness of others.I continue to be livid