It looks like you're new here. If you want to get involved, click one of these buttons!
Subscribe to our Patreon, and get image uploads with no ads on the site!
Base theme by DesignModo & ported to Powered by Vanilla by Chris Ireland, modified by the "theFB" team.
Comments
I found this document that relates to the Unilever DB Pension scheme that makes reference to the x16 multiplier that I was referring to in addition to other ways by which the annual pension allowance is reduced.
https://www.google.co.uk/url?sa=t&source=web&rct=j&url=http://www.myupfpension.co.uk/documents/leaflets/annual_allowance_2015.pdf&ved=0ahUKEwj734C-6N_NAhVDbRQKHdN1CG4QFggyMAU&usg=AFQjCNFpwgaCkNBnX3J1kssLC3OYfbQDxg&sig2=vfeKs2SFqvpFjQg8tSs3Ig
Certainly for the tax year that I am referring to, the rates applied by HMRC were indeed penal. There were around 100 people in the company who were impacted...I know this because my wife is European HR director.
It largely follows the same format as the Unilever document in my previous post. To be clear, I am referring to a Defined Benefits scheme here. The taxation treatment of DB schemes is different to other personal pension schemes.
The key information is the calculation of the "Annual Input". As you can see, it is based on the difference between two accounting periods and there is a x16 multiplication factor. So, in the case of my sales colleague who had his best year ever (probably earning over £200k gross) this was preceeded by a poor year (he actually had some severe health issues which inhibited his ability to work / hit targets etc). So in his case, there was a large "difference" that was them multiplied by 16 to arrive at his notional "annual input". My guess is that this figure would have been in the region of £1M - I'll admit that I don't know whether this was then taxed at 40% or some other rate but I do know that the liability was in the region of £250k.
So, my point is that Gordon Brown wasn't the only one to stick the knife into pension schemes. In the case of my company scheme, the legislative changes introduced by Osborne were the final straw - scheme administration became too expensive and it effectively closed at the end of last year. Whilst my colleague will still be fine financially despite handing over a large chunk of money to HMRC, many other lower paid employees will now have to make different arrangements to prepare for their eventual retirement.
that means that anything above £10k into the pension pot was income
so that means, to get a £250k (total) tax bill:My YouTube Channel
My YouTube Channel
My YouTube Channel
I'm not directly involved in any of this and I'm not going to pretend that large numbers of people in u.k have been impacted and indeed those that have are more likely to be higher earners. All I do know is that a number of taxation specialists who were engaged to deal with this issue on behalf of the company scheme, struggled with the calculations that were required.
Plenty of people live on less. With no mortgage, I think between £10-£15k on top of the state pension should be OK for a lot of people. They won't be rich, but they won't be living hand to mouth. The more then better, but having reasonable expectations and a cheap lifestyle goes a long way to happiness!
My YouTube Channel
The pension income projection assumes you buy an annuity of course, which is not always the best pension option. THere are lots of things you can do with your pension money to gain as much as possible. Same goes with pensions contribution investment.
The problem is, its complex and requires thought and time.