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The Pensioner's Page


All kinds of promises are being made by the various parties in the run up to the election.  But how to pay for them is the often unanswered question. More on that later. It seems likely that the Winter Heating payment may well be taxed.  It does seem reasonable that all kinds of allowances should be taken into account, including things like Child benefits

There was a  rapid U-turn on the proposal to let people who were forced to buy annuities (up until the 2015 budget) to offer them for sale.  A number of companies were rubbing their hands with glee at the prospect of buying up annuities from cash-strapped pensioners at half their value. So, not only would  they have been ripped off once by having to buy poor paying annuities, they would be ripped off again and left in an even worst state in their old age. HM Gov. suddenly realised that they (or someone else) would have to pick up the bill for supporting old people above the bread line (and not trusting the financial sector to give fair value), have stopped the bill in its tracks. After all, they will already have to pick up the pieces of the decision to let people splurge their pension pots. I say again, the worst political decision of the century - so far.

The Spring Budget 2017
Click the link to see the government page

Broadly the Spring budget ...
Increased the duty of stronger alcohol and cigarettes
Increased car tax
Increased the Gaming tax
Increased the amount of contribution to National Insurance of the self employed
Reduced the tax free allowance (MPAA) given to those who cash in part of their private pension

The 2016 budget fizzled out like a damp squib.  Much of what is proposed will not take effect until April 2017.  A tax on fizzy drinks and forcing schools to become academies. the suggestion that the wealthy might lose the opportunity to salt away vast pension pots faded away and is still tax payer funded up to 45%. Business rates and capital gains tax on investments have been reduced - surprise surprise ! The higher tax rate on incomes starts from 45,000.  But many of the other proposals, including help for small savers, are still unclear at this point (17/3/2016)
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Managing money when the banks don't pay
Article by Hargreaves Lansdowne. What happens to your pension when you die

Hargreaves Lansdown have excellent aricles to help you make decisions
http://www.hl.co.uk/pensions/annuities
http://www.hl.co.uk/pensions/drawdown
https://www.hl.co.uk/free-guides/your-options-at-retirement
https://www.hl.co.uk/free-guides/making-more-of-your-old-pensions
https://www.hl.co.uk/pensions/interactive-calculators/pension-calculator
http://www.hl.co.uk/pensions/sipp
http://www.hl.co.uk/news/articles/new-pension-freedoms-one-month-on-what-are-investors-planning

Pension pots What happened to folk who opted to invest their pension pot in 2015, when that became possible ?  It must have been worrying, initially, as the markets fell almost immediately after but have recovered since.  If someone put 100,000 in stocks and shares in 2015 and decided to cash in 4% per annum, after the initial fall the extra punch of shares exposure helped these pots recover when markets rallied by the end of the two years, to 105,475, so they would have done better than if they had bought an annuity (and would still have their capital intact).

Interesting articles from this group:  https://www.ageing-better.org.uk

The triple lock Pension.
Things have changed  since the 2016 Budget. George Osborne is no longer Chancellor and Baroness Altman is no longer chief honcho on pensions,  Since leaving the position she has indicated that the Triple Lock Pension guarantee may not be sustainable in the long term,   Since 2010, the "triple-lock" policy has meant state pensions rise by the inflation rate, average earnings or 2.5% - whichever is highest.

Although Downing Street has reiterated its commitment to the Triple Lock, Baroness Altman pointed out that in a low, nil or negative inflation rate, promising a 2.5% increase will cost billions, which might not be justifiable.
However, the latest Autumn Statement by Philip Hammond in 2016 indicated that the Triple Lock will remain for the current parliament (i.e. until 2020.)
Also proposed was a 2.2% government bond from Spring 2017 but only up to 3,000. It will be available to anyone over 16. But at 66 (net) per annum interest it only looks good against the paltry sums being offered for cash savings.

GENERAL ADVICE (Citizens Advice Bureau) http://www.adviceguide.org.uk/

Excellent advice on the new pension freedoms from the Age Action Alliance

An explanation of the Triple Lock (State) Pension by Baroness Altman

Ageuk.org.uk - Expert help and advice you can now  be obtained every day of the year from 8am to 7pm on a local number, 024 7643 3043.

I have frequently mentioned that the biggest investment bargain of all time has been the SIPP (Self Invested Personal Pension) which allows someone under 55 to add to a pension pot (up to their whole annual salary if they can afford to do so) with the help of the taxman.  In fact, the wealthier the worker (employer of employee) the more the taxman contributes. There was a hint that Mr Osborne might restrict this particular gravy train, which, on its own, would diminish his deficit by many billions.  NOT SO !  Under pressure from his colleagues he has dropped this idea, although the total amount that could be put away has been reduced to a piffling 1 million. But the whisper that the tax relief might be reduced to a standard 25 - 30 percent has resulted in a massive, sudden, increase in pension savings (according to one source as much as a 65% increase )  Why not?  This is a gift from everyone to you !

Incidentally, many do not realise that, up to the age of 75, almost anyone can contribute to a SIPP (and get tax contributions), even non earners and children, although the amount they can add each year may be less. Check the complicated rules.

SIPPS Apart from those who have contributed towards a pension scheme through work, this is the other way people have built up 'pension pots'. The government supports an extremely generous tax friendly arrangement whereby anyone under 75 can put up to their annual earnings into investments.  The lifetime maximum was 1.5 million! This is expensive for you, the taxpayer, so from April 2016, the maximum will be a paltry 1 million. 

The following chart demonstrates clearly how this scheme benefits the wealthy