2024 UK politics - now with Labour in charge
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Also in 2006 and 2011 and 2017.
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Agree re students (conflict of interest as I have two of them!) but you're moving the goalposts from: "Is a change being introduced in a coherent manner, allowing for sensible planning by individuals and promoting the type of collective behaviour that is desired in the long term?" to "They've done OK so they can't complain if we sting them for a wedge of it back".
If the argument is the latter then the sensible thing to do is to increase income tax. This shares the pain, rather than hitting those who just happen to retire at the wrong time.
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What did they change?
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Yes, that's fine. It's not really complicated: I'm just arguing that the regulatory approval part shouldn't account for ~50% of that phase. It shouldn't take longer to check and confirm compliance than it takes to prepare the proposed design in the first place. Duplicating existing regulation on fire safety into the Planning system only makes this worse.
1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
Pinnacle Monzonite
Part of the anti-growth coalition0 -
There never seems to be any tears for those earning over £360k.
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Re DB pension schemes, it's years since I was close to industry-wide details but I recall that a typical scheme in the "old days" was
i) pension of 2/3 of final salary for 40 years of contributions, prorated for shorter periods of service, so that each year of service gave a pension accrual of 1/60 of final salary; or
ii) TFLS of Multiple * final salary plus pension with an accrual rate of 1/80, with the lump sum envisaged for use to repay mortgage or otherwise set the pensioner up for retirement.
I can't for the life of me recall what "Multiple" was, but I assume it this regime that gave rise to the 25% TFLS, as whatever "Multiple" was, the change in accrual rate was equivalent to giving up 25% of your pension in exchange for the TFLS.
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The lifetime allowance.
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But that was not a change to the PCLS.
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1/60th schemes, no automatic entitlement to PCLS
1/80th schemes gave 3 times pension as PCLS, so 3/80ths
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Why did they need to introduce insanely complicated protection for those who had the right to a higher lump sum before 2006? Or other specific protections for when it changed on the other dates?
If the upper amount you can take as a tax free lump sum is reduced, that's a change.
The time that this value didn't change is the time you flagged as the only change.
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Having both an annual contribution allowance and a lifetime value allowance is plain stupid. It should be one or the other, not both. The restriction should be on how much you can contribute and get tax relief on, You should not be penalised because your investments have done well.
Unfortunately, regulators and rule makes tend to be a bunch of @rseholes who have no practical experience, and no comprehension of the impact of their decisions on the real world.
Remember 'Pension simplication'?! 🤣
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I'm not arguing here for the regulators / politicians, but the argument would perhaps be along the lines of "The LTA affected the quantum of the TFLS by means of capping the overall 'pot' size, but if the LTA doesn't apply then the TFLS is unaffected as it remained at 25% of the 'pot'".
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That second paragraph also describes senior Labour politicians quite well.
"I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
applies to the tories just as well
all parties are guilty of the same approach:
take piece of legislation, add bag on the side, repeat
my bike - faster than god's and twice as shiny0 -
Well, they charge more fees for the checking than the design so they have to justify that somehow!
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There is from me, I read that they can't even afford to buy a house in their preferred location.
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Sure, but if you are planning for your retirement based on taking out a large amount tax free, then that amount you could expect reduced at each of those times. The link to the LTA has now been broken, so I can't see any philosophical reason why it stays at £268,275.
If you think that is the best route to give anyone reduced taxes, then fair play.
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Who was it who reduced the lifetime allowance?
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Nothing about the current regime represents my view as to the "best" way to achieve anything other than confusion, frustration and unintended consequences. There are only a variety of piecemeal "least bad" choices given where we are.
But given the LTA has been canned, I'd change the TFLS back to 25%. If a government wants to sting the better off just because it can, it should be via income tax or via a "frivolous purchases" loading into VAT, which post-Brexit, we are at liberty to do. Bikes with Di2, campervans and skiing holidays, my (not so) guilty pleasures in life should all attract such a loading (or a standalone sales tax, to avoid overcomplicating the VAT regime).
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A nuclear power station is an NSIP and the time required for the secretary of state to make a decision hit 4.2 years in 2021, but you will be pleased to know that they've made some reforms to try to bring this time down.
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How is being taxed on your income "stinging" the better off? I think if a £280,845 one off zero income tax band didn't already exist in these circumstances, it would be a weird thing to introduce. Even stranger to think its problem is that it isn't high enough.
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The Guardian says that Labour is considering increasing CGT to 39%.
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Problem is that it (the TFLS) does exist and has done for decades. So its treatment, amendment etc. has to be coherent in that context. (Or at least should be coherent to satisfy my nature desire for order and logic). I doubt it would be introduced now, but that's why the joke about the tourists in rural Ireland asking how to get to Dublin is funny. "Well I wouldn't start from here if I was you."
Re "stinging" the better off, if that has to be done, then doing it via top rate (45%) band is the best way to do it. It's simple, isn't obviously arbitrary in nature, more likely to raise the targeted amount of extra tax, and unlikely to promote unintended behaviours that store up problems for later.
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In the absence of Rick, I feel obliged to point out that it isn't only working people that can pay for things.
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And I don't think anyone is proposing getting rid of it entirely are they?
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No.
I referred to "treatment" and "amendment" in the post you've quoted here and all my previous comments have been in the context of a reduction to £100k, which I understand is what has been leaked as potentially proposed.
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Can you detail more of the unintended behaviours that store up problems for later that are caused by people only being able to take 25% of the first £400,000 of their pension pot?
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Indeed. And tbh, the whole personal tax regime should really be designed to answer the question "How do we best achieve what we want to achieve for society as a whole?" (assuming our fearless leaders actually know what this is) rather than thinking about piecemeal changes to taxes that politicians have managed to leave out of their election commitments to not increase taxes.
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No. It's not my policy so I've not studied them. And I have no qualification as a "behaviourologist" (if such a specialism exists). But changes to taxes other than the mainstream ones always drive behaviours that weren't anticipated in advance - they never raise as much tax as headline calculation suggest - so there's no reason to believe that a major change to the TFLS would be free of such unintended outcomes.
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I don't think they exist.
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