Pension increase

[Ovis aries]

My national pension increase makes me £3.93 a week , but will decrease 20% when they deduct more tax from my private pension, big fooking deal.

[i-Ram]

My national pension increase makes me £3.93 a week , but will decrease 20% when they deduct more tax from my private pension, big fooking deal.

Your private pension would have been a lot bigger if it weren't for Gordon Brown. Funny old world Ovis?

[Boycie]

I hope I have a pension when I retire.

[Ovis aries]

I hope I have a pension when I retire.

​I hope you do to , I put a lot into mine.

[Boycie]

Me too, but weirdly it's never enough, everytime I have a "review" they say I should put more in.

anyone would think they're on commission or something?

[McRamFan]

Your private pension would have been a lot bigger if it weren't for Gordon Brown. Funny old world Ovis?

​How do you figure that?

[eddie]

I hope I have a pension when I retire.

​Retire?

What does that mean?

[i-Ram]

​How do you figure that?

Don't take it from me MRF, take it from any independent website you care to google.  One at random below. Mr Brown needed £5bn in 2007 to fund another wave of supporting his client state (or perhaps to cover the crash he could see was coming in 2008?) and he decided that people like Ovis and Boycie, who for years had put money aside to protect their own position in retirement, should pay. Redistribution of wealth is all very well and good with a bit of warning - e.g. Letting us know that the tax rate is going up by 1% in a few months time.  Raiding prudent savers pension funds overnight I would argue is borderline criminal. Another inconvenient truth in respect of Labour tax policy. 

 

Has Labour really ransacked our pensions?

By DAN HYDE 
UPDATED: 00:01, 10 April 2010

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Just how much has Gordon Brown hurt your retirement? As we approach the end of Labour's thirteenth year in government, the words 'disaster' and 'pensions' seem to roll off the tongue.

To blame or not to blame? Labour's record on pensions has been strongly criticised by experts

But has it really all been that bad? Or is this 'disaster' just an election myth drummed up by the Tories and Lib Dems?

To find out we must travel back to those heady days in 1997 when a fresh-faced, newly-appointed Chancellor said he would be tapping pension funds for some extra tax revenue.

The Chancellor's name was Gordon Brown and he scrapped the dividend tax credit. Pension funds could no longer shield 100% of their investment dividends from the grasps of the taxman.

The grand plan was that scrapping the relief would put an extra £5bn a year into government coffers. And after all, the argument followed, some defined benefit schemes had built up healthy surpluses - surely this could be put to public use?

But in reality the move would maul private pensions.

'This raid on pensions reduced the value of retirement funds by over £100bn,' says Martin Bamford, pensions expert at award-winning independent financial adviser, Informed Choice.

'Effectively, Labour has stolen £5bn a year from our pension funds. And that 1997 legislation really set the tone for things to come.'

Sure, £100bn is a mind-boggling sum, but what does it mean for us as individuals?

Rather helpfully, financial services provider Brewin Dolphin has created a calculator to show how much you might have received if those dividends had been left alone.

We briefly ran a few figures through this 'rough estimation' system and found a 40 year old man planning to retire in 25 years making monthly contributions of £250 to add to his current £60,000 pension pot will eventually lose more than £120,000 on the final value, because of the tax relief reforms.

He'd have to work an extra two years into old age to make this up.

Michael Troy, founding partner and independent financial adviser at Troy French and Partners did a quick calculation of his own, and found himself £100,000 down.

Critical: former goverment adviser, Ros Altmann

'It's a good example,' he said, 'but in reality, depending on what you were invested in it could be a lot more or less. No question, though, money purchase plans have been hit.'

Gordon Brown's last words on the matter came in staunch defense three years ago.

He said: 'It was the right decision for investment. It was the right investment for our pensions and the right decision for our economy.'

But the facts don't support his case. Help the Aged has reported that 2m older people live in poverty. Granted, this is a decline from 2.9m in 1999, but it's still a disturbing number.

And the reason is that the basic state pension falls below the poverty line. Labour's attempts to tackle this have created an unedifyingly complex credit system. Exasperating statistics show that up to £5bn in pension credit, housing benefit and council tax goes unclaimed by 5m pensioners each year – or 30% of entitled recipients - as many simply become lost in a mire of paperwork.

What about A-Day?

As Tony Blair's time at the helm wound down, Labour did make an attempt at reform. It was hotly anticipated. It was called A-Day. It came on 6 April 2006.

This new legislation allowed up to 100% of income to be squirreled away into a pension fund. But it also placed a cap on the total that may be held in pension funds at £1.5m (rising to £1.8m by 2011) and a rise in the minimum retirement age was announced, going from 50 to 55 in 2010.

The changes, says Martin Bamford were a mere flash in the pan - if anything, they made things worse.

'A-day was construed with the aim of making pensions simpler, but they just ended up even more complex,' he says.

'The Labour government thought that if they equated 'simple and cheap' with 'pensions', people would be encouraged to save for retirement. Which, of course, was absolute nonsense.

'Theirs has been a disjointed and ill-thought out policy with no consistency'

Credit system

With Pension Credit, Savings Credit, State Second Pension, Winter Fuel Allowance, supplementary cold weather payments, Christmas bonuses, Council Tax benefit and Housing benefit swamping pensioners heads, Bamford seems to have a point.

Malcolm Small, director-general at the Centre for Retirement Reform, agrees. He brands the current system a 'bamboozling morass introduced by governments of whatever hue'. And Labour has not helped make things easier.

Dr Ros Altmann, a former pensions adviser to Tony Blair goes even further. She says: 'Pension credits undermine private pension savings. Our state pension is just about the lowest in the developed world.

'Because the state pension is so inadequate, Labour introduced the Pension Credit, a means tested top-up to the state pension which can bring pensioner incomes up to at least £130 a week.

'Yet anyone over 60 can still get £130 a week, even if they have never paid National Insurance, as long as they don't have much private pension or other income.

Iron Lady: Margaret Thatcher's government was responsible for cutting the Pensions-Earnings link in 1980

'The Government is creating a significant disincentive to people, especially lower earners, to bother contributing to pensions at all.'

Bamford adds: 'If one person saves carefully into a pension fund all their life and another squanders away their money on booze and fags, they may well both end up with exactly the same income in retirement.'

This 'horrendously complex' system, Altmann says, could – and should – have been given some attention. 'Labour could have adopted radical reform, but chose not to', despite her pleas whilst advising the Government between 2000 to 2005, she says.

Earnings link

The reality, Bamford continues, is that there have plenty of promises but not much of action, and this has made the future uncertain for those looking to secure their retirement.

A prime example of confusion has been Labour's attitude to the 'earnings link'.

In 1980, Margaret Thatcher cut the link between pensions and earnings. Geoffrey Howe, the then-Chancellor of the Exchequer said this was 'to reduce the burden of financing the public sector, so as to leave commerce and industry to prosper.'

And sure enough the schemes built up a good deal of money during the next 20 years, but many commentators now suggest Labour should have restored the earnings link while the going was good.

If they had done this, our pensioners would get £40 extra per week, an amount of money that some would suggest better reflects their contribution to the prosperity they have helped build.

On the other side of the argument, Joanne Segars, the chief executive of the National Association of Pension Funds (NAPF) says Labour has finally begun to come up with some goods.

'The current Government deserves credit for its state pension reforms,' she says. 'Reducing to 30 the number of years needed for a full state pension and restoring the earnings link are changes not to be dismissed lightly. They will help millions of people, and women in particular.'

But her praise ends there. Much, much more is needed to tackle what is fast becoming a crisis.

She adds: 'Despite these reforms, the UK's state pension system will fail its most basic function – namely to provide security for all and ensure that everyone in society has an adequate income in retirement to enable them to live in financial security and with dignity.'

 

'Timebomb'

The result of Labour's years in office is a 'pensions timebomb', according to Brewin Dolphin.

As the divide between private and public sector pensions grows, with almost four times as many private sector jobs likely to have no pension provision, the Labour government's decision to scrap the tax credit in 1997 looks all the more harrowing.

According Brewin Dolphin's survey of its clients, restoring dividend tax credits ranked as the first or second priority for 78% of respondents.

More reforms needed: NAPF chief executive, Joanne Segars

Jamie Matheson, the company's executive chairman says: 'The pension crisis is the second biggest fiscal disaster facing the country over the coming decades. The shadow chancellor has hinted that the Conservatives will restore dividend tax credits when they can'

But Gareth Rees of Gem & Co. Wealth Management thinks that it might be time to give up the ghost on the lost tax dividend.

'The real pensions time bomb is that people need to be contributing more into their pensions rather than how much they lost based on 13 year old legislation,' he says.

'It is unrealistic and unlikely that the legislation will be repealed, considering that the government is trying to scrape together all the money they can.'

Latest reforms

And even Labour's latest reforms – one of which will mean high earners will need to pay tax on pensions savings - have been given the thumbs down.

Association of Consulting Actuaries chairman, Keith Barton says: 'The policy is intended to raise revenues from around 300,000 high earners, but in reality … it will have the effect of reducing pension prospects for hundreds of thousands of employees on low and middle incomes.'

Pensions guru and former Head of Pensions at Prudential, Steve Bee, agrees.

He says: 'What we shouldn't be doing is throwing away one of the principles of pensions – that you only pay tax once on the money you save.

'Higher earners now pay tax twice; that's a door that should have been left tightly shut because one [it] will be kicked wide open, and we'll all regret that.'

 

 

Read more: http://www.thisismoney.co.uk/money/pensions/article-1692321/Has-Labour-really-ransacked-our-pensions.html#ixzz3WzNSz263 
 

[McRamFan]

Iron Lady: Margaret Thatcher's government was responsible for cutting the Pensions-Earnings link in 1980

​Thats where it started, so not all Labours fault.  Their fault for not putting it back, however that meglomanic thather had already done soo much damage it will take another 2 generations to correct it.

[i-Ram]

You look after that one good eye MRF.

IN OTHER NEWS, it is still being reported that it is totally uneconomic to mine coal in the UK, and that Margaret Thatcher remains dead.

[McRamFan]

Looking at the past and seeing its efffect on the present with one good eye is better than being blinkered and thinking this mess is only 5 years old, but hey all good Tories like personnal attacks don't they?

IN OTHER NEWS http://www.ft.com/cms/s/0/caa4b092-2a1a-11e4-a068-00144feabdc0.html#axzz3WzsTvI9u

 

[Ovis aries]

You look after that one good eye MRF.

IN OTHER NEWS, it is still being reported that it is totally uneconomic to mine coal in the UK, and that Margaret Thatcher remains dead.

Also to build ships, and produce steel , and hosiery etc in fact make anything thanks to the bitch .

[i-Ram]

Looking at the past and seeing its efffect on the present with one good eye is better than being blinkered and thinking this mess is only 5 years old, but hey all good Tories like personnal attacks don't they?

IN OTHER NEWS http://www.ft.com/cms/s/0/caa4b092-2a1a-11e4-a068-00144feabdc0.html#axzz3WzsTvI9u

For the record I am not a Tory, although I think I will vote for them this time.

 

[i-Ram]

Also to build ships, and produce steel , and hosiery etc in fact make anything thanks to the bitch .

Ovis have you actually heard of the global economy, and if you have do you blame the Bitch for that too?  Face facts, because of cheap labour the Eastern Europeans and the Asians can produce just as good quality (for today's everyday needs) for half the price. It's ok having a busy old workforce mining coal, knitting garments, making forks and spoons, etc., but who do you think is going to buy them.  I am glad that the minimum wage is where it is, but as a consequence we are, and always will remain, uncompetitive with other countries/continents who don't give a fig regarding workers rights. 

[McRamFan]

Ovis have you actually heard of the global economy, and if you have do you blame the Bitch for that too?  Face facts, because of cheap labour the Eastern Europeans and the Asians can produce just as good quality (for today's everyday needs) for half the price. It's ok having a busy old workforce mining coal, knitting garments, making forks and spoons, etc., but who do you think is going to buy them.  I am glad that the minimum wage is where it is, but as a consequence we are, and always will remain, uncompetitive with other countries/continents who don't give a fig regarding workers rights. 

​Australia, New Zealand  and Canada to name just a few, dodged the 'Global' crash.  That happened because they did NOT sign up to deregulation and privatisation that Europe and the USA sold thier souls to where the only people that benefitted was the top 1% of the rich went from owning 4% of the global assets to owning 14%, juring her time in power and that has always increased since because of what her and reagan instigated.

I would vote for None of the above, but hey PR won't be allowed while there is a tory party holding any sway.

[ketteringram]

​I hope you do to , I put a lot into mine.

Currently paying around £700 per month into mine. That sounds quite promising, until you take into account the fact that I started way too late. Young ones..... Save. Don't put it off, thinking you'll never get there. You will! 

[uttoxram75]

I can't help but think Labours biggest failures are when they refuse to reform divisive, short term Tory policies they inherit.

[froggg]

I'm paying about £800 per month into mine, my employer adds more, not sure exactly how much though.

[eddie]

You look after that one good eye MRF.

IN OTHER NEWS, it is still being reported that it is totally uneconomic to mine coal in the UK, and that Margaret Thatcher remains dead.

​I keep dancing on the old fascist cow's grave, just to make sure she doesn't tunnel back up.

[i-Ram]

​I keep dancing on the old fascist cow's grave, just to make sure she doesn't tunnel back up.

You really should have no concerns Eddie, but when they buried her supposedly they followed her request that she should be laid to rest on a slight tilt so as she decomposed she would continue to move to the right.