Crosswords23 mins ago
Work Hard And Provide For Your Retirement........
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....and Labour will give it to someone who didn't.
Has this theiving government no shame?
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It's a bit of a rant but here goes:
Dear Ms Reeves,
I’m a pensioner who is 70 in March. I’m writing to try to explain how your Budget has stolen a lifetime’s plans for a happy retirement.
It’s so dreadful in so many ways that it’s hard to know where to start, but I’ll try to explain as clearly and concisely as possible, so please bear with me.
I was born and raised on a council estate in Leicester and, like my parents, voted Labour all my life.
My father died in 1965 after a long, painful, and courageous fight with cancer – he was 45 and I was 10 as I watched him die in our front room. My mum was left heartbroken, with no husband, no job and four children aged one to 12 to raise, alone.
As a teenager, my father fought in the Second World War, which reinforced in him key virtues in life, which he instilled in me before he died, like hard work, determination, honesty, integrity, respect, aspiration, and an ability to stand on one’s own two feet – you get the picture.
I tried to follow his guidance. I studied hard at school, at university (the first in our line), and at work. I became a scientist and reaped the financial rewards of a long and successful career. I retired at 60, worn out by a full-on, relentlessly demanding job, but content that I’d done my best and planned and saved wisely for a retirement my parents never had.
Before your Budget, I’d have paid £200,000 inheritance tax, which is a huge amount of money in any working man’s book, but it’s arguably “fair”.
However, after your Budget it’s £640,000, which is gut-wrenchingly unjust. The increase of £440,000 reflects your raid on pension funds, which doesn’t end there, as my children could pay £360,000 income tax on the balance they inherit.
How can you justify such a draconian, double taxation of a life’s work?
Your IHT changes offer me Hobson’s Choice:
Live with the sword of Damocles and pray for a Conservative government to rescue me before I die.
Act now, but ruin the final years of my life by trying to mitigate the plunder of my pension.
Mitigation means breaking life-long principles that got me to this place, like drawing-down money I don’t need just to spend it, or selling my family home or giving it to my children (which triggers rent from my taxed income that’s then taxed as their income, i.e., another double taxation) or emigrating to save a fortune, if I live long enough, but be apart from my children, grandchildren, and friends.
Please help me, which choice should I make?
There’s also a sinister threat hidden in your raid on personal pension funds, that of coercion, which was so chillingly described by many MPs during the debate on assisted dying. The following outlines my situation, but also illustrates the generic trap:
Dying before April 2027, when I’m 72, would make my pension worth £800,000 more, as no inheritance tax is due by me, or income tax by my children.
Surviving this milestone but dying before April 2030, when I’m 75, means I’d pay £440,000 inheritance tax but leave a pension worth £360,000 more, as income tax still isn’t due by my children.
If I die after I’m 75, 40pc is lost in inheritance tax, plus 55pc in income tax when my children draw down the balance.
Why do you think that inherited pensions should ever be taxed twice? And how did you satisfy yourself that the increased coercive threat to pensioners to die sooner rather than later, which your new inheritance tax creates, justifies your raid on their pensions?
I also want to say that before retirement, I’d served my time and paid my dues through a lifetime of taxes, a huge amount of taxes, up to 30 times more per year than the average working person – the state has already taken its pound of flesh.
Nonetheless, until your Budget, it had all been worthwhile; I’d enjoy my retirement and leave a legacy for my family, something my parents couldn’t do.
But that has been stolen by a Budget that effectively punishes people for following the rules of working hard and saving diligently for retirement so that the state does not have to spend a penny to support them – someone who’s self-sufficient, to the very end.
In reality though, no one knows when the end will come, so the financial mantra for pension funds has been to withdraw slowly and spend wisely so it lasts a lifetime, however long that may be.
Regrettably, your Budget means that this will change, and people will think twice before firstly saving into a pension at all – better to spend money “now” and rely on the state to support retirement – and secondly, withdrawing it wisely – better to drawdown rapidly to avoid crippling death duties.
Do you realise how your inheritance tax raid will inevitably change how people save and spend pensions?
Sadly, I can’t bring myself to fritter money away, so I’ll emigrate, take my pension with me, try to avoid inheritance tax altogether, spend my money abroad, protect my pension and my estate from you and your appalling raid on hard-working people’s lifetime’s savings, and leave a legacy to my family instead of to you.
I’m sure that many people who are in the same boat will do something similar and, with the help of their gleeful IFA, nullify this raid one way or another.
I hope you’ll correct me and explain why what I say is all a misunderstanding, so I look forward to hearing from you, but please, do your best not to mention “tough decisions” or a £22bnb black hole.
Yours sincerely,
– Name supplied
P.S. I wanted to share a quote from a Treasury spokesman, who reportedly said: “We continue to incentivise pension savings for their intended purpose of funding retirement instead of them being openly used as a vehicle to transfer wealth.”
Try selling that to a 70-year-old retiree like me who’s had it hoisted on them during their retirement with limited opportunity to do anything about it.
Also, think carefully about the logic, or lack of logic, behind such a crass statement and philosophy – how can anyone save the “right amount” of money for their retirement, as opposed to potentially transferring wealth when they die, when they have no idea whatsoever how long their retirement, if any, will last?
Please, go back to the drawing board because you have got this one spectacularly wrong, and you don’t need to be an economist to work that out.
basicallly she has just given the green light to sponge off the state as much as possible. Never put anything away for retirement, the state will pay. Sadly though fewer and fewer will be paying for more and more. Of course when you are robbing Peter to pay Paul, you will always get support from Paul
//Before your Budget, I’d have paid £200,000 inheritance tax, which is a huge amount of money in any working man’s book, but it’s arguably “fair”.//
I understand some of the sentiments but it's the estate that pays the IHT not the person who has been saving for their retirement or building up other assets by working hard and not frittering money away. I'm not sure why the retirement has been stolen*, other than the pensioner may be worrying that they can't provide such large sums for their offspring.
I doubt Rachel Reeves will feel shamed at all.
*Maybe I've missed something though about changes affecting pensions. I'm puzzled by the bit that says "The increase of £440,000 reflects your raid on pension funds". Maybe TTT or someone can clarify what that is, and whether it's paid while this man is alive or by his Estate after death?
NMA: "I'm not sure why the retirement has been stolen*, other than the pensioner may be worrying that they can't provide such large sums for their offspring." - the draw down pot will be taxed as IHT on the estate, then what is left will be taxed as income when inheritor takes it. That's double bubble.
The pot in question is 800k by no means gargantuan and the government will swallow at least 40% of that. Then later what it's left will be taxed as income. Even the most hard line lefty would think that is unfair. Not sure about the example given in the letter but the principle is clear double tax on pension pots.
I don't think the majority of pensioners or taxpayers will lose any sleep over this person's stolen retirement- it's hardly causing poverty or going to encourage people to fritter away money then live in poverty in retirement rather than be very comfortable, just so their dependants can get less and pay less IHT.
Are you against IHT altogether TTT (and I can see an argument for being against it in principle)?
NMA: "Thanks. So he won't lose out but the estate will." - yes money created by his life will be ripped away at death raher than left to family etc.
"I'm not sure why drawdown pots were exempt previously."
because
"And drawnn down income from a pot has always been taxable as income, so it's no surprise a beneficiary of the pot who draws down would be subject to it."
That's double direct taxation on the same money, surely you see that is wrong.
What incentive is left for people to priovide for their own retirement?
I'm seriously considering squandering everything and scrounging off the state later when I'm skint
