Pension rule changes in the short, medium and long term

[bofh]

Hi,

Time to dust off your crystal ball... What changes in UK pension rules do you foresee in the short, medium or long term? Feel free to share what action you would take with your own pension arrangements in response, should your prediction come true.

As a memory jogger, some recent changes included:
* 2018 & 2019, Increase to auto-enrolment minimum contributions
* In April 2015, pension "freedoms and choice" came into effect
* October 2012, auto-enrolment was introduced

Cheers,
bofh

[swill453]

It's proposed that the minimum pension age is increased from 55 to 57 in 2028, then increase in step with any increases in the state pension age. But nothing's baked into law yet.

Scott.

[bofh]

Here's a few initial thoughts:
* government will at some point think about enforcing their environmental policy goals on asset managers of pensions and perhaps SIPP holders (?) - mandated ESG investing if you like. Not sure when but would imagine murmurings will appear within a few years, with the concrete action with 7 (punt alert!). I would assume some carrots dangled in the beginning, but ultimately the laggards will be pushed
* linking your pension pot to cost/provision of your future social care somehow. This is more of a stretch and there's other ways a government could do this - but pensions seem like an "easy target", particularly when they set the date sometime off into the future so it "doesn't feel so immediately bad"
* in the long term, using metrics associated with your health practices to determine how much your pot contributes to some sort of health fund to deal with the side effects of obesity, smoking, alcoholism etc. Tweak the tax take accordingly on drawdown mode?

I welcome your (equally outlandish) ideas.

-bofh

[rhys]

I was amazed that George Osborne allowed us full access to pension pots. I'd never had any desire to buy an annuity, so this rule change changed my attitude towards them completely. I wish now that I'd diverted more income to my SIPP.

I presume that most people are careful with drawing down their pots. But the temptation to withdrawn large amounts early in one's retirement could be strong. Perhaps limit withdrawals to the natural yield of the portfolio? Expand that to allow much greater drawdown in later years?

I would expect the 25% tax free withdrawal to be scaled back.

Ultimately pensions would only be beneficial for those able to use them to avoid paying higher rate tax during the contribution years. They remain a formidable vehicle for allowing wealth to cascade down the generations.

[jonesa1]

When push comes to shove, the main purpose behind encouraging people to invest in pensions is to minimise the help that the state has to provide to pensioners. That can be achieved by providing incentives to encourage savings, up to a level which means the state won't have to step in to top up the basic state pension (and potentially no further), or by reducing state pension for people with sufficient alternative funds. Politically there doesn't seem to be any appetite for ending the state pension as a universal benefit (a reduction in credit rating caused by a poorly performing economy, leading to increased cost of borrowing, combined with the new level of state debt, could increase that appetite), but I can imagine a reduction in the tax allowance available for higher rate payers - politically it would be a much easier sell (as most people don't get it and a majority of those that do, probably don't vote for Labour). So my guess is that in the next year or two the tax benefits of pensions for higher earners will reduce, with some of the savings being used to encourage basic rate payers to put more into their pensions. By also keeping ISA allowances static, that would encourage wealthier people to invest their money into more easily taxable forms. Combine that with a further narrowing of the gap between the tax applied to different forms of income (PAYE, dividend, capital gain) and the Chancellor could increase his tax revenue without too many political consequences, lots of noise probably, but the people affected would expect a socialist Labour party to squeeze even harder.

[dmukgr]

I think all of this is going to bite me very hard in the near future as I never bothered with a pension until a few years ago and am now desperately putting as much in as I can (using past allowances) whilst intending to retire on dividend income in the main as well.

Probably safer for me to add a ten grand buffer into my annual retirement target

[SoBo65]

I recall during the financial crisis in Ireland, the Government imposed a percentage deduction from all pensions funds (including personal pensions) to contribute to impact of the bank bailout, maybe.....

[xxd09]

The government will be coming for any money people have saved to pay down the immense costs incurred by this latest disaster
We are seriously over borrowed as a nation and there will be a reckoning -increased tax rates etc
People who have done the right thing and have reasonable savings are the only worthwhile target
No real escape possible without leaving the country!
No easy answer for investors except to save as much as you can in as many forms as you can-ISAs,SIPPS,cash accounts ,land etc and live frugally
xxd09.