As I have shown in ‘Making Pensions Work’ all pensions in the UK are currently effectively paid by the state.

The reality is that this is the only thing that is sustainable.

Ritchie is actually saying that not taxing you on your savings so that you can fund your own pension is exactly the same as you being taxed in order to pay someone else\’s pension.

That the tax relief you get on your pension is the same as the tax you pay to pay a civil servant\’s pension.

8 thoughts on “Jeepers!”

  1. Back in Thatcher’s day I was discussing her suggestion that people should make their own pension arrangements with an economist friend. He laughed it down immediately. For two reasons, firstly, the sums involved even if only half the workforce had a private pension are astronomical. The fund managers would be the most powerful men in the country, and secondly, no government could resist stealing such a tempting target. Considering Brown’s pension grab, I think he was quite right.

  2. Not everyone has an economist friend, though, so this would naturally limit the amount of people who could make such an arrangement.

  3. Is there a huge difference though? e.g take child benefit. If the government gave everyone who has a child a £20/week tax rebate, it’s pretty hard to see any difference with the current situation with higher tax and then a payment.

  4. Matthew,

    There is, of course, absolutely no difference between the govt deferring tax on your pension contributions and them paying something in to the pot. In fact, that’s exactly what they do with your Basic Rate.

    The big difference is that it is almost impossible for you to access your pension pot until legal retirement age. Therefore the contributions are locked away, within a highly regulated sector, etc, etc.

    Tax relief on pension contributions is not the same as a tax rebate on your in-the-pocket pay. I’m sure somebody could work out the NPV for you.

  5. as roue le jour implies….to fund your retirement, you need to accumulate a pot of at least £500k. how the hell can you do this even with your company chipping in at the same rate as you. It is not feasible with our current financial markets. And it shows graphically what a fantastic benefit a final salary scheme is/was…. £500k per citizen is an awful lot of money for Ritchie and co not to tax for some good cause or other

  6. Pingback: FCAblog » Ritchiebollocks on pensions

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