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Whither the LTA ?

PhaseThree
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Whither the LTA ?

#236635

Postby PhaseThree » July 14th, 2019, 7:12 pm

(Yes I know it's Men's Finals day at Wimbledon but I was thinking of the pension Life Time Allowance rather than the Lawn Tennis Association.)

Recently there seems to have been an increase in media/political focus on the effect the last set of pension rule changes is having on public services. Specifically there are reports of senior NHS medical staff refusing to take on extra shifts due to the detrimental effects of the annual allowance taper and the lifetime allowance. Similar problems are being reported with the Judiciary, Firefighters and Armed Forces.

Ex-womble and PM-almost-elect Boris has promised to fix things stating “This is something I have raised repeatedly, the £1.1m pension cap, which is affecting doctors and other people. It’s obviously wrong, it’s causing a real problem, I have raised it repeatedly with the Treasury and they keep telling me they’ve addressed it but the headlines show it has not been addressed, and we will fix it, we will fix it.”.

I can't help noting he's promised an awful lot to a lot of people in the last few weeks but maybe the threat of the NHS hitting problems may mean this is real.

A Ms Truss has further stated “The government are taking this issue very seriously, However, the House will recognise that the same tax rules must apply identically to everyone in the same situation, regardless of their employer. It is simply not possible for the tax rules applying to senior clinicians in the NHS to be different from those that apply everywhere else.”

Personally I have a vested interest in seeing the LTA vastly increased or abolished altogether, but am too old to trust the words of a politician wanting to be elected. Does anyone have any thoughts on this ?

Alaric
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Re: Whither the LTA ?

#236640

Postby Alaric » July 14th, 2019, 7:40 pm

PhaseThree wrote: However, the House will recognise that the same tax rules must apply identically to everyone in the same situation, regardless of their employer. It is simply not possible for the tax rules applying to senior clinicians in the NHS to be different from those that apply everywhere else.”


The NHS can write its own rules for how its pension scheme operates. What it may have to do is to make additional earnings or even all earnings for some senior people non-pensionable.

Alternatively the Government could accept the bizarre effect of the tapering rules and modify or abolish them for everybody.

Chrysalis
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Re: Whither the LTA ?

#236650

Postby Chrysalis » July 14th, 2019, 8:38 pm

There’s a lot of misinformation about the current NHS issue, which is about the tapered annual allowance which may be triggered by doctors doing voluntary overtime and for which there is no easy ‘quick fix’. The overtime payments are not in themselves pensionable, but may trigger a reduced annual allowance which then attracts a tax charge which can easily be far more than the overtime payments. Hence the rational response, to refuse extra work. It is the loss of the work which is causing the NHS problems.

I can see one potential solution being to restrict the DB pension membership to the first £X,000 of salary. This already happens in the university pension scheme, where the DB part only applies to pay up to about £50k. It would be a radical solution though and a bit of a sledgehammer to crack a nut.

gryffron
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Re: Whither the LTA ?

#236844

Postby gryffron » July 15th, 2019, 4:59 pm

The usual unintended consequences from the hideously overcomplicated Pension rules. And the government's answer will no doubt be to introduce even more complications, with even more unintended consequences.

:roll:

Snorvey
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Re: Whither the LTA ?

#265306

Postby Snorvey » November 19th, 2019, 9:00 am

The shambles continues.....

Doctors in England have been promised their tax bills will be covered by the NHS in an attempt to get them back doing overtime shifts.

It goes on to say.....

The proposal will mean doctors can take money out of their pension pots to pay the tax bills they get next year.

The NHS will then top up their pension pots before retirement, meaning the cost of the measure to the health service will be spread out over time while doctors will not be out of pocket.

The emergency measure will only apply for the 2019-20 tax year.


The whole pensions thing has gotten out of control. They're just making it up as they go along.

Remind me, when was pensions simplification.....2006? That's going well.

https://www.bbc.co.uk/news/health-50467400

Pheidippides
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Re: Whither the LTA ?

#265307

Postby Pheidippides » November 19th, 2019, 9:08 am

I am going to make a bet here.

2020 - LTA up, TFLS down

Regards

Pheid

scrumpyjack
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Re: Whither the LTA ?

#265332

Postby scrumpyjack » November 19th, 2019, 9:57 am

Well at least Hammond is gone. He really didn't think through many of his budget measures.

Alaric
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Re: Whither the LTA ?

#265339

Postby Alaric » November 19th, 2019, 10:09 am

Snorvey wrote:Remind me, when was pensions simplification.....2006? That's going well.


The problem becomes that you need different rules for defined benefit schemes particularly final salary ones. Even for defined contribution schemes restricting the worth of investments rather than contributions is problematic.

Taxing the increase in value of defined benefit schemes is excessively complicated as indicated by the NHS. Simpler surely to just put a cap on benefits if such a measure is desired. I would have thought a system where additional earnings are taxed at near 100% is best avoided. Aren't the civil servants who devise such schemes capable of spotting the problems, even if the politicians don't.

Urbandreamer
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Re: Whither the LTA ?

#265378

Postby Urbandreamer » November 19th, 2019, 11:05 am

gryffron wrote:The usual unintended consequences from the hideously overcomplicated Pension rules. And the government's answer will no doubt be to introduce even more complications, with even more unintended consequences.

:roll:


I'm sorry but your statement irritates me hugely. To be clear I DO NOT BELIEVE THAT, when the consiquences you have been warned of unfold, it can EVER be described as UNINTENDED. The government was repeatedly told that these pension changes would also effect the people who they do. They chose to proceed. The results are as predicted and hence as accepted/intended by them.

As for Ms Truss's statement, SINCE WHEN have tax rules applied identically? It's my understanding that very high earners are limited in the contributions that they can make to a pension, ie 1/4 of what I can. CAN THAT BE DESCRIBED AS IDENTICAL!

I'm sorry to be quite so intense, but I get very upset over politics and in particular lies or "statements that are somewhat different from the truth". A certain Mr Johnson has a reputation for such and lost a job in the media for fabricating stories. He promissed to oppose something for his constituents and arranged to be absent when the vote came due. I personally wouldn't bother believing a word that he says about anything. As for those who chose him for his current position, knowing his history, well there is a well known statetment by Joseph de Maistre that's apt.

With respect to the LTA, I personally have few concerns. Up to now I have managed the pension system to my benefit (or "gamed the system" if you want to be critical) and fully expect to be able to do so until I start to claim my pension. I believe that I can avoid the LTA (which I strongly wish to do because it's an additional tax). I also avoid being a higher rate tax payer through a mix of pension contributions and charitable gifts.

By the way M.S.W argues that the LTA should remain and the contribution limits removed.
https://www.ft.com/content/ce34fcac-725 ... 68069fbd15

I can see some justification to her view.

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Re: Whither the LTA ?

#265385

Postby scrumpyjack » November 19th, 2019, 11:17 am

This is the same Ms Truss who tried to introduce the probate tax and claim it wasn't a tax!

Unfortunately if we try to rule out any politician who told fibs or bent the truth, there would be very few, if any, politicians left.

Boris was head of the Foreign Office and one definition of a Diplomat is someone who lies for his country.

I would certainly rather have Boris with his faults than Corbyn with his Hamas and Venezuela supporters, and it looks like most of the electorate would too.

Urbandreamer
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Re: Whither the LTA ?

#265404

Postby Urbandreamer » November 19th, 2019, 12:06 pm

scrumpyjack wrote:This is the same Ms Truss who tried to introduce the probate tax and claim it wasn't a tax!

Unfortunately if we try to rule out any politician who told fibs or bent the truth, there would be very few, if any, politicians left.

Boris was head of the Foreign Office and one definition of a Diplomat is someone who lies for his country.

I would certainly rather have Boris with his faults than Corbyn with his Hamas and Venezuela supporters, and it looks like most of the electorate would too.


I don't know if you will get your wish, that depends upon the majority vote. However it would be nice to have the option to vote for honest and trustowrthy people wouldn't it, rather than having to vote for people who lie and break their promises. Sadly I'm not sure that we have that option, though it does raise the question of what we could expect of the people who we vote for.

By the way, the quote that I was thinking of is “Every nation has the government it deserves”. Possibly we do deserve people like Mr Johnson.

Ps, sorry everyone. I'll stop the political commentry, assuming that pensions do not become part of the political campaign and that we assume statements made by politicions on the subject are likely to be lies. Sadly the latter might just make the thread pointless as any changes will be what they want rarther than what they say they intend.


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