The tax subsidy the private sector pension now receives annually has already provided the private pension sector with more cash each year than it has paid out in payments to those in retirement. The result is that the situation has already arisen where every single penny of pension paid in this country is at cost to the state.
He’s measuring tax relief now against pensions being paid now.
But the correct calculation is tax relief now as against pensions to be paid from the funds that have received the tax relief. And at that point we’ve also got to work out what will be the tax paid on those pensions so that we can deduct that from the amount of tax relief being offered.
No, I’ve no idea either but that is at least the beginning of getting the sums right.
On the basis that pensions should grow over time, the relief given on contributions should always be outweighed by the tax received on the distributions (and that charged, in the case of private pensions such as SIPP’s, on passing the remaining assets to one’s antecedents upon death).
The result is that the situation has already arisen where every single penny of pension paid in this country is at cost to the state.
At least his priorities are clear.
“The result is that the situation has already arisen where every single penny of pension paid in this country is at cost to the state.”
Given its entirely possible for the State to tax everyone’s income and capital at 100%, every private purchase could be said to be at the expense of the State, so its a bit of a tautology really. It really just depends if you’re a fascist or not.
Does it not benefit the state if I make my own provisions for my old age rather than being wholly dependent on the state when I retire? Does it not benefit the state when I retire five years earlier due to having a private pension, thus freeing up my job for someone who would otherwise be on jobseeker’s allowance and probably other benefits? I’ve always felt that the state should incentivise those of us who prefer to paddle our own canoe rather than be dependent on the state.
We should also notice the misuse of the word subsidy. Taxing someone less than we otherwise would is not a subsidy.
As per the previous thread he really has got a downer on pensioners. As others suggest it is probably down to jealousy. I particularly recommend this piece of snark “I do think you might be protesting too much
Do you think younger generations have a duty to keep you in the cruises to which you wish to be accustomed?” as being a great insight into the starch based lifeforms view of pensioners. No wonder he’s Johnny no mates.
Pensions tax relief is actually just taxation deferral. Rather than tax you today, your money goes into the pension pot pre-tax and you get taxed in the future when you collect your pension.
If your future rate is lower than your current rate then there is a benefit, but the state is just saying that you should be taxed on your lifetime income and not punished for having that lumpily distributed across your life.
I am not seeing any subsidy here.
Giving him the benefit of the doubt, perhaps he wants to bring back the state earnings-related pension scheme (SERPS). All private pension providers would be replaced with a single state provider; and instead of investing the money in businesses, it would be “invested” in the way politicians use that word.
I believe the French system is something like that.
Murphy’s economic theory is:
All your money are belong to us.
You could be using this time to work harder, earn more and pay more tax. Why is the government subsidising your participation in blogs?
Why does he not ever complain about the cost to the public of tax exemptions for charities, which logically are far harder to justify?
Anything to do with his obsequious grant seeking?
Don’t forget that most charities are subsidised by the taxpayer. That is subsidised using the correct meaning of the word subsidy.
Bloke: Yep, his intention is clear: work into the grave or starve to death, YOU PEASANTS! How *DARE* you attempt to make provision for your future YOU BASTERSDS!!!11!!!
If he has split up from his wife then I’d assume she was sensible enough to make sure he couldn’t get his hands on her pension
@Bnic unfortunately she seems to have taken whatever sanity he once had with her, along with his copy of Economics for Dummies, But – he kept the trainset, so as far as he’s concerned – win.
Our Chief Executive talks to the Financial Times about the potential impact of the pension tax
Bnic, on the top of page 4 of my property settlement with my ex wife, it says that all my retirement benefits are mine. Period. Forever. Being of limited mental capability, she said, “Okay.”
I get a laugh when I think about it. My retirement is going well; I don’t have to share it with anyone.
Though our son still lives with me. But that’s okay, cause I like him.
“every single penny of pension paid in this country is at cost to the state”
I thought that was what he wanted?
“But the correct calculation is tax relief now as against pensions to be paid from the funds that have received the tax relief”
I don’t think Murphy sees it like that. All he seems to see is large amounts of money that he could control and direct.
Any income allowed after tax is a subsidy to this creature.