MPs will escape pensions tax raid
![[Deleted User]](https://w9.vanillicon.com/v2/92868482ecea591711556f240608c94d.svg)
[Deleted User]
Posts: 14,922 Forum Member
✭✭
MPs will not be affected by George Osborne’s latest tax raid on pensions, even though private sector workers with identical retirement incomes will be hit, said experts.
The Chancellor last week lowered the limit on lifetime tax-free pension savings, meaning a punitive rate of tax will be levied on pension pots totalling more than £1.25 million. Ministers said the cap would affect only the extremely rich, but experts have warned the new lower limit could hit workers who are members of final-salary schemes. Under current parliamentary rules, long-serving MPs can retire with a maximum pension of £43,387, payable from the age of 65. According to calculations by Hargreaves Lansdown, a financial services company, a male worker in the private sector would have to save £1.44 million to receive a £43,387 pension at current annuity rates. A woman would need to save £1.34 million.
Such private sector pensions would be hit by Mr Osborne’s new tax limit. However, MPs with a similar pension income would not. The difference arises from the way public sector pensions are valued to see if the cap should be applied. Many public sector workers’ pensions do not have a distinct pot of cash to pay for them, instead being funded from a general fund. Accountants say that HM Revenue and Customs calculates the pot value of a public sector pension by multiplying the annual sum by 20. So for tax purposes, the MP’s pot is valued at £867,740, well below the tax cap. Laith Khalaf, of Hargreaves Lansdown, said the figures showed the “historically generous” pensions awarded to MPs.
http://www.telegraph.co.uk/news/politics/9733500/MPs-will-escape-George-Osbornes-pensions-tax-raid.html
Blimey, that was a stroke of luck wasn't it...
Are the bars and restaurants in Westminster still subsidised? Do MP's still get some £400 per month food allowance? Are the expenses all fine now, no dubious claims?
:mad:
The Chancellor last week lowered the limit on lifetime tax-free pension savings, meaning a punitive rate of tax will be levied on pension pots totalling more than £1.25 million. Ministers said the cap would affect only the extremely rich, but experts have warned the new lower limit could hit workers who are members of final-salary schemes. Under current parliamentary rules, long-serving MPs can retire with a maximum pension of £43,387, payable from the age of 65. According to calculations by Hargreaves Lansdown, a financial services company, a male worker in the private sector would have to save £1.44 million to receive a £43,387 pension at current annuity rates. A woman would need to save £1.34 million.
Such private sector pensions would be hit by Mr Osborne’s new tax limit. However, MPs with a similar pension income would not. The difference arises from the way public sector pensions are valued to see if the cap should be applied. Many public sector workers’ pensions do not have a distinct pot of cash to pay for them, instead being funded from a general fund. Accountants say that HM Revenue and Customs calculates the pot value of a public sector pension by multiplying the annual sum by 20. So for tax purposes, the MP’s pot is valued at £867,740, well below the tax cap. Laith Khalaf, of Hargreaves Lansdown, said the figures showed the “historically generous” pensions awarded to MPs.
http://www.telegraph.co.uk/news/politics/9733500/MPs-will-escape-George-Osbornes-pensions-tax-raid.html
Blimey, that was a stroke of luck wasn't it...
Are the bars and restaurants in Westminster still subsidised? Do MP's still get some £400 per month food allowance? Are the expenses all fine now, no dubious claims?
:mad:
0
Comments
regards jack
From the link:
Accountants say that HM Revenue and Customs calculates the pot value of a public sector pension by multiplying the annual sum by 20.
This is not an issue specific to MPs it actually shows how public sector pensions are yet again more generous than those of the private sector.
Yes I saw it and what you say about the generosity of public sector pensions isn't news but it doesn't change the fact MPs voted for legislation that won't impact them and one wonders if they would if it had.
If they'd voted for a limit that was just above their notional pension pot I'd be more excited but this was still nowhere near impacting them.
so the reason why mp's have escaped this tax is that their pensions are half the size.
Which was my whole point.
My private sector final salary scheme uses the same calculation. My latest statement has the projected pension per annum and the value of my pension for testing against the LTA. The latter number is 20 times the projected pension per annum.
Ooh no you can't say things like that on here!
The Usual Suspects would have you believe there are no private sector final salary schemes!