THIS IS HUGE! Lifetime Allowance and other changes

In the March 2023 budget, Chancellor Jeremy Hunt pulled out from his red box some key changes to pensions. We’re going to deal with the annual allowance first and then the lifetime allowance, fill in some gaps that weren’t in the speech, and then look at what you might need to DO as a result of these changes.
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[@MeaningfulMoney]

If the Chancellor didn't keep making changes to pensions, I probably wouldn't have a job! But there are more reasons than that to be cheerful about the March 2023 Budget. Here's what you need to KNOW and DO...

[@davidcooks2379]

Labour said they are going to reverse these changes ones they are in power

[@DS-cf1zc]

In fairness the constant changes are a headache - in the current governments time they have lowered the LTA, and then frozen the ALA, now lifted the LTA. I have friends who have quit work owing to their earnings versus LTA and been around 97-99% of the LTA. Rather than work on, and a fair few who have stayed on and quit the scheme. My problem is slightly more complex, I am around 50, but been paying in since I was 16 - I had estimated breaching the out going LTA in the next 6 to 8 years, and I had already stifled my career and declined promotions as I didnt want to have to deal with breaching the LTA earlier. I have also had near runs with the ALA, after my last promotion I had a near miss, and just scraped under on the three year rolling rule, where the two years before and after got me off the hook. So the ALA lift is welcome, as I am not earning huge amounts, I was being almost punished for being wise. I must confess I am not a fan of total removal of the LTA. In fact I would have suggested lifting it back to where it used to be - around 1.5 or 1.3 m - which was beyond my reach. Absolute madness, but I will keep your details should a future government change it again and I find myself too close for comfort.

[@LD-vn3zu]

@DS. Wow - the fact that the LTA was incentivising you to stifle your career - that’s such an insane disincentive. Really shows how these sorts of changes can dampen the economy.

[@riko7176]

This should be taught in schools from an early age

[@Grumpygaming70]

It's really great to see videos on the high earners what about us poor sods on minimum wage ? I work for our King in a round about way and the wages absolutely suck 😡

[@robertmarsh3588]

Disgusted by Labour's attitude to the LTA..why are they so desperate to penalise anyone that invests for their future? Labour brought this in long ago - 2006, and it was over £2M then. It has been shrunk constantly. £1M won't go far in 10 years time. As it is, it probably will only generate a sustainable income of £35k. What will that be worth after 10 years inflation? Are we meant to be contributing into our pensions or not?

[@MeaningfulMoney]

Couldn’t agree more, Robert. I’ve been calling for it to be abolished for years

[@slayerrocks2]

Its highest level was £1.8 million. It increased annually under Labour from 2006 to 2011. The tories have cut it, and now blown it up. Had it kept up with inflation, it would be £2.72 million. I doubt too many would have been screaming about it, in that case.

[@kw8757]

Labour see pensions as easy pickings for their tax and squander policies so they can then distribute it to the wasters in society, the "something for nothing brigade".

[@slayerrocks2]

@@kw8757 so are you just going to ignore that the tories cut the LTA from Labour's high of £1.8 million to £1.07 million over the following 10 years?

[@ghowells5433]

However, labour have said they will reverse the LTA if, sorry when, they win next year.

[@nickfifield1]

Please can you explain the tax benefits now the LTA is no more. For example , It’s my understanding, with the LTA we paid 55% tax above the £1.074 million, is this changed to the income tax rate of 40%?

[@neilmishra5328]

Can you do a video with walk through examples please to see how the changes would effect you before and after.

[@slayerrocks2]

If you salary sacrifice into your pension, reducing tax and National Insurance payments, this is the value of your starting collateral. Basic rate: £100 costs you £68, which means, you receive a boost of 47% on your investment straight away. At the higher rate (£50k salary) : £100 costs you £58, which means you receive a boost of 72.5% !! on your investment straight away. If your company matches it 1 for 1 (usually to a limited percentage), and this is all applied at your highest tax rate, it works out as follows: Basic: 195% so £100 costs £34 Higher: 245% so £100 costs £29 Invested for 10 years at 10% returns that £100 becomes £259.37 of which £64.84 is tax-free. Over 30 years, £1,745 of which £436 is tax-free Not bad for £29-£34, eh? Even accounting for inflation. Don't opt out of your pension scheme. Try to contribute enough to get the full matched amount out of your employer.

[@roywilliams1093]

Tax free cash question. - CONTENT REQUEST Now that tfc has a fixed monetary value, is there now a monetary value of dc pension fund that is not beneficial to go beyond? I.e once you take the max tfc and the remainder of your pot let's you withdraw a private pension plus state pension up to the equivalent the higher tax band you will start paying 40% tax. If this is the case why would you invest more in a pension scheme rather than take it as taxable income today at 40% tax? I understand there may be other inheritance tax benefits.

[@gerbil1981]

Love your videos. Suggestion for a future topic that is a little different and something I am struggling to find is those with no dependents, no one close to leave anything too. The childless/childfree appear to be increasing in number so whilst an edge case now will likely become more common. Whats the best way to work out to have enough but not leave lots behind which whilst will go to charity so not wasted can feel like taking too much of a financial hit for a benefit I may never see?

[@NZAnimeManga]

Highest tax burden since WWII, and these LTA + Annual Allowance changes will just be reversed by the next Labour govt (plus, will affect very few people). Budget was a massive disappointment.

[@pip1723]

Can't see how pensions were made a priority when the majority of the country are experiencing to biggest drop in living standards for over 50 year's.

[@rorysparshott4223]

Because it's a massive tax cut for the very wealthiest.

[@eddiewatts7792]

Because high earners are high contributors overall. It retains skills in vital roles, not just the NHS but also professionals and wealth creators. Higher rate tax payers make up most of the income tax collected. The budget can't just be about the bottom 20% it needs to cater across the board and for the wider economy and society

[@pip1723]

It's a budget for the 1% the majority are being squeezed.

[@rorysparshott4223]

@@eddiewatts7792 so cutting that rate of tax income as has been done here is loopy. Look, we know trickle down economics doesn't work, we can prove it empirically. The only reason people like it so much is because the people who implement it get a tax break and get to pretend it's in the public interest.

[@eddiewatts7792]

@@pip1723 about 4% of people reach the LTA. i look at busy shops and restaurants & think those that had money still have, those that didn't still don't. the cost of living may affect all but only a minority to a significant level. its become just another media storyline

[@evilzzzability]

In practice, it's not as huge a change as people think, as once you get much above £1m in your pension you'll have a hard time withdrawing it without paying higher tax rate (40%) anyway.. The freeze in the tax-free portion could be significant in a bad way -- it won't affect many today, but it could do over time as, with any fixed threshold, more people will get pulled in due to fiscal drag.

[@Bettys_Eldest]

The only change of benefit to me in the budget was the removal of LTA. Disappointed that Labour plan to scrap the change, but disgusted that the government would event think to abolish the LTA. By all means set it at a reasonable figure (such as £1.5m) and index it in future, but to remove it totally in the current economic situation is an insult to the vast majority of the population.

[@NbyD]

so great all thoe rich people are getting ahead further in old age too.

[@torus186]

I have currently used 19% of my LTA and if i drawdown another 100K this year 23/24 that will be 29%. My question is If I crystalise the remaining in tax year 24/25 will I not add to the LTA usage. Reason I ask is that if Labour win the next election LTA will return. If this is the case what percentage of LTA use will I fall into?????????

[@MeaningfulMoney]

There’s a sort of transitional arrangement next year where there will be no LTA charge (not applicable for you anyway) but somehow the LTA does exist, before the whole thing is removed in 2024. No idea what Labour will actually do if/when they get in but they would struggle to make the changes retrospective, so I imagine that you’d be OK. We won’t know until it happens though!

[@ianswales7219]

Just wondering if your at your life time allowance and the tax free pension cash is frozen in cash terms then you just putting off the tax til a later day as you saving not having to pay the extra 25% tax on pension over the lifetime allowance but not getting 25% tax free cash on that amount over the lifetime allowance.

[@brianevans2819]

Karmer and all the other million pound pension pots will be very happy, thank you from all us pensioners who don’t have a pound pension pot, we are really pleased for them.

[@kw8757]

What did you do with the money you earned in your working life? Did you invest for your future or did you piss it up the wall?

[@brianevans2819]

@@kw8757 absolutely none of your business, I am not in public up for scrutiny by you or anyone else, but. I can assure you it is no where near Kramer’s or the million pound plus brigade, but you obviously are, you must be a politician or a top civil servant? Is your name, Blair, Johnson or Cameron?

[@kw8757]

@@brianevans2819 If you're going to whinge on YT you're making it our business.

[@brianevans2819]

@@kw8757 whinge isn’t it called freedom of speech, you must obviously have a million or more in your pension pot, most people haven’t earned a million in 50 years, never mind have a pension pot of it.

[@leebailey229]

They left the NHS because not because of the tax issue, rather the additional EIGHT years they would have to work in the terms and conditions changes. Its the very reason I left. I guarantee it wont encourage anyone to return. They are long gone and probably to warmer sunnier countries. Retire as early as possible and enjoy your time.

[@myfyrmadocjones]

Labour has said they will reintroduce the LTA if they get into power. Great move to undermine the new policy. Now people can't feel confident taking up the extra allowance in case they may be penalised at a later date.

[@jimb7406]

Labour are just making noise. They will not reintroduce the LTA - far too complicated. Future governments of any particular hue are more likely to tweek with the PCLS limit or make some portion of the pension liable to IHT. Even this is awkward - how to be equitable to DC and DB pension types?

[@MPD90]

@@jimb74063-out-of-4 investment advisors surveyed say they believe the lifetime allowance will be reintroduced in some form. Unfortunately.

[@stevenrose7419]

Hi the pension pot limit was that for the amount contributed or the total value including returns. Be great for clarity incase is reintroduced

[@shaungregory1789]

Hi Pete, this really affects us, we were ordinary hard working people who saved hard and due to long hours we never had children. We paid alot into pensions and work pensions too. A test at 55 and 75 limited us funds. Now the shackles are off we can spend more each year. If Labour win the next General election think we might have be to non dom.

[@winteriscoming4379]

If you have a property sipp and a normal sipp do you have a seperate annual allowance for both or is it one combined allowance annually which can be spread across sipp types however I chose ?

[@robertgroom4406]

This is all great - I currently pay £40k a year into my pension, and I'm right up against the current lifetime cap. I could stretch to £60k a year for the next couple of years by taking money from my non-tax protected investments - but I fully expect Labour will reverse this change after the next election- so I'm wondering whether I'd just be storing up a big tax charge for myself. Personally, I think it was a mistake to remove the cap entirely. They should have just moved it back to £1.8M as it used to be, and committed to having it grow in line with inflation. I also think the £40K annual cap is reasonable. These changes are quite inflammatory politically, and I'm fed up of them constantly changing the rules.

[@johnporcella2375]

Robert, That it is inflammatory is on purpose! The Chancellor set Labour a trap and they have been caught hook, line and sinker, appearing to be against those looking after their retirements. As they can be passed on with no IHT, so a future Chancellor will have to look into this, another trap

[@Alex-ek5fb]

Hmm. Elections in late 2024, so likely this £60k allowance for two tax years (Labour unlikely to change allowances mid year). Then in March 2025, Labour reintroduces the LTA (probably at the previous level). To be honest, even if your are close to the current LTA, you would only be just above it in March 2025. The only people this really benefits is those who want to take a lump sum in retirement: prior to the change, they pay 55%. For the next two years, they presumably pay 20/40/45% income tax - is that right?

[@stephengreen2626]

Whatever historic averages say, I only expect a short pension investment to return the money I put in. However, even though I have stopped working and drawn pensions, am I allowed to start a modest pension for say two years getting contribution tax relief on the way in and (due to the tax free lump sum) only paying tax on part of it on the way out? If so this has got to be a good deal.

[@MeaningfulMoney]

yes you can, and yes it's a good deal!

[@MRAROCKERDUDE]

Good riddance Lifetime Allowance. With an ageing population, more people will need to take care of themselves rather than rely on the state. Quite simply, taxpayers won’t be able to support a larger pool of retirees. It’s unsustainable. Far better to get rid of the huge disincentive that was the LTA

[@petsloveonly]

Can u explain how to transfer pensions into a sipp or sass and use it to buy commercial properties in a ltd company 🤔

[@philipbuckley1095]

Dear Pete, I am a Consultant Hospital Doctor. Loads of my colleagues have dropped out of the NHS Pension scheme, largely to avoid pension tax charges. I imagine that some of them might reconsider now though. Cheers for the video.

[@keithjohnston1981]

This is very true. Im employed by Wesleyan and the core of my clients work in NHS. I’ve had so many conversations with GPs over the years with AA AND LTA concerns. This changes a lot.

[@tancreddehauteville764]

Why should the rest of us pay for your tax break? You can laugh now but you won't be laughing for long.

[@realmintchocchip]

@@tancreddehauteville764 people who can take advantage of this change have already paid way more tax than you. They’re probably pay 45% of their salary as tax. Are you still not satisfied? This is pretty sad. They worked hard for this salary.

[@tancreddehauteville764]

@@realmintchocchip We ALL work hard, and we all pay tax - what's your point? Those who pay more tax than me (I'm a 40% taxpayer) do so because they earn much more than me and they can well afford to pay a lot more tax. A flat rate of income tax, which is what you are arguing for, would result in a higher basic rate and many more lower paid people being taxed more!! This is obviously not right in a fair society.

[@realmintchocchip]

@@tancreddehauteville764 not gonna try to argue with you. You do you. Let’s agree to disagree. I’m not capable to change any policies anyway.

[@shona8651]

Great video. If Ihave already drawn a db pension in 2012 and have a second db pension to draw that is over the old LTA , I assume I should do that after 5/4 to avoid a LTA being reintrouduced by Starmer ?? Thanks.

[@michaeldurant6105]

Thanks for the video. Just contacted payroll to up my AVC Extra contribution by another £100 P/W. Only 2 years to retirement day aged 58 to take my DB pension.

[@slayerrocks2]

Good luck. Have a happy retirement. 🎉

[@robertmarsh3588]

I was planning on retiring next year at 60 as DC pension approaching LTA as pointless to go on, especially as income tax so high (no personal allowance for me). I've been ploughing £40k a year in since paying off mortgage, and getting a wage wise and promo in my early 50s. I was delighted at the budget change as seemed to make staying in work longer and building up a better pot a good option. Really no clue what to do now. Feel genuinely upset by the whole thing. Labour is punishing anyone trying to plan for their pension by treating this as a political football. Most of my working life I've been on £30 or 40k (or a lot less). I've never been super rich and have ploughed almost everything into my pension....

[@jimb7406]

Robert how are your and partners ISA's? I think it is best to have good DB/DC pensions but to also have ISA investments in parallel that will provide income. Best of both worlds. If your ISA's are low you could fill them up using taxed salary or transfer some PCLS monies from your DC pension to ISA's as I have been doing. I have been crystallising £160k annually last couple of years and depositing £20k each year into mine and spouses ISAs. Note that ISA's are subject to IHT but we do not worry about that as we don't care what happens after the last man/woman standing croak.

[@Deanodisco1]

Commendable Robert , but don't forget to enjoy what you've amassed, life is short .

[@porschecarreras992cabriole8]

Just retire at 60 and enjoy life my friend. No point going for more as you have achieved so much already!

[@fredatlas4396]

@robertmarsh3588 Lucky you, don't worry about the rest of us who won't be able to afford to retire and are suffering & struggling to survive since our tory government's been in power since 2010

[@tancreddehauteville764]

My heart bleeds for you...not. You've been lucky to have been able to pay off your mortgage early and have taken huge advantage of the tax shelter of pensions. Consider yourself very lucky indeed. Why should people like you receive such huge tax advantages when most people will never approach the old LTA? The way to force people to work longer would have been to increase the minimum retirement age from 55 to 60, not bribing high earners. What Labour should do is reverse this LTA abolition and instead increase the state pension.

[@sgist7824]

This doesn't affect me, I don't even get close to the annual £40k, that would be a dream. But if there's good news for anyone, that's something given how things are. I'd have thought increasing the personal allowance would have helped more people who genuinely need it.

[@torus186]

If you are young even a small contribution can compound over time given favourable markets. It is fairly easy to hit the old limit especially if you don't need to draw on your pension until late 60s.

[@owensmith7530]

Having pension funds free of inheritance tax should never have been introduced. It's recent (done by the Cameron/Clegg coalition government) and it distorts things dreadfully. It would be far better for Labour to scrap the tax free inheritance and leave the LTA abolished.

[@MeaningfulMoney]

I do wonder if this is what will happen, Owen. we'll see I guess...

[@DHunter-ky9ho]

If you've already taken some tax free cash before will this count against the new 268K limit?

[@Holdeenio]

Great summary Pete, thank you. Definitely confirmed your advice to ignore the LTA charge when paying in, was the correct advice.

[@MeaningfulMoney]

Nice to be vindicated, Samuel, but it could all change again eventually!

[@kevinsyd2012]

Pete: don't fall into the trap of saying that the LTA scrapping benefits only the wealthy. Teachers, police officers, firemen and other public sector workers on generous defined benefit pension schemes will all benefit from this removal of the lifetime allowance as their guaranteed pensions (index linked and with spose pension) are each supported by a pension pot >£1 million. It's a good move for many, not just for doctors.

[@slayerrocks2]

If it had increased at the rate Labour increased it, today it would be £2.35 million. The tories have used the nuclear option on a problem they created. Who would have a problem at that level?

[@richardjones3112]

That must be one hell of a pension scheme to accumulate £1million. Can any firemen out there confirm this?

[@STKS1991]

Labour said they will reverse it, suspect there would be too much threat of legal action if they did that, so i imagine what will follow is changes to IHT rules to make pensions over a threshold liable to IHT.

[@MeaningfulMoney]

I absolutely think you’re right, STKS. This will be a solution that almost everyone will be able to accept

[@glynjones1112]

I'm a 47 year old local government officer who is increasingly thinking of his retirement. I have a DB scheme and an AVC, that I pay a nominal sum into, but I've reached a position in my life where I may have a few more quid a month. I had intended to put my surplus into my AVC, but when I tried to project that in my plan, it told me I exceed my savings amount .....but hasn't that been abolished? I'm also thinking towards helping my kids set up savings / pension plans as they embark in adult life ......help!!! What to do, how and when 🤷

[@sushilvekaria164]

A friend of mine is 38 with a £360k DC pot and is currently contributing £50k/year. Should he be worried about LTA coming back and therefore easing off his contributions?

[@MeaningfulMoney]

Nope, I wouldn’t worry about that. It’s the tax benefit now that matters more.

[@wyscr2]

I exceeded the LTA by more than 50% and have been taking a pension from a drawdown arrangement, the portion over the LTA hasn't been touched (because of the 25% surcharge). What's the impact if any on this?

[@silversurfer6758]

I think that you're not going to see any impact now on your 50% excess. You'll just pay standard income tax on it if/when you withdraw it. I'm not a financial advisor though.

[@mwscuba]

also the fiscal drag by not increasing the tax bands again might come across as just helping the already rich get even richer

[@WilliamM007]

Pete, I retired around 18 months ago drawing DB pensions which breached the LTA. I paid the charge and took no tax free cash. I asked my broker whether I can take my entire SIPP, which is as yet untouched and is well below 25% of my total pensions and well below £268k, as tax free cash. I’m told no, as I used my original LTA. Doesn’t sound fair as everyone seems to get 25% tax free and the LTA is going. Great channel, thank you. Will

[@peterwormald7114]

Hi Pete, cracking video again. Is it true that if I die my pension pot [it's in drawdown] passes on to my spouse tax-free, however if I nominate 98% to her and then 1% to each of my two son's there will be no IT for them? cheers

[@kevinmcguire1049]

Good update, you mentioned a further video. Could you cover the LTA changes that are occuring from 6th April 2023 and the LTA changes that occur in 24/25 tax year when the LTA is being abolished and is dependent on passing additional legislation and the differences between these events.

[@Shep139]

Is it just the higher earner limit that has changed. For example I earn about 40K a year and in recent years have been topping up my SIPP to a maximum of 30K a year because of extra money from an inheritance. Can I now put in more than 30K a year? - up to the amount I earn each year.

[@MPD90]

I wish they'd just pick a set of rules and stick with it... impossible to plan properly long term into the future.

[@enigma1000]

This video assumes that these LTA and other changes are permanent. It doesn’t sound sensible to assume this. Unfortunately given the Labour Party’s comments about reversing these changes we’re now in a complete pensions mess. Actually we were in a mess before but at least we had some ludicrously complicated rules to work with. No one opts out of the NHS pension scheme. Why not? If that was the best option for senior NHS staff why does the entire pension tax system have to be changed so that NHS people can enjoy what, in most of the private sector, are completely unaffordable pensions? We also have the anomaly that an NHS pension is valued at 20x its annual amount whereas the cost to buy that pension from a private pension pot would be roughly 40x. Another example of largesse towards the public sector. Put another way, the doctor’s pension of £50k pa would cost £2m to buy privately, or roughly twice the private sector (old) LTA. The problem was not the LTA but the very generous NHS pension scheme. I know of someone local who has a £3m pension pot. He’s just been handed £500k tax gift. Complete madness.

[@Cluna880]

Your explanations are very clear I'm in my 30s but already thinking about retirement. Thanks for all the work that you do :)

[@MeaningfulMoney]

You are so welcome - thank you for a lovely message! 🙏🏻

[@iainhunneybell]

The LTA has an ‘amazing’ history (being polite) of being up, going down, up, down and now gone. Unbelievable … only it isn’t. But it makes you previous a dive about not holding off investing now for a possible future tax event oh so very wise, as now that’s gone. And some interesting ‘details’ you touched on

[@MeaningfulMoney]

Glad it was helpful, Iain!

[@DS-cf1zc]

At least for now I know I can keep paying in to my pension scheme, as I was worrying after nearly 40 years paying in and skirting the edges of the LTA when I would have to leave the scheme and work on without being able to improve my retirement prospects.

[@MRAROCKERDUDE]

Labour’s knee jerk reaction to “reverse LTA scrapping” was really irresponsible. The sensible thing to say was “people need to plan pensions over the long term so we’re not going to have a knee jerk reaction to this policy, pensions need to have cross party consensus to allow people to plan”

[@crimsonpirate1710]

You are right, they really fked up. I wouldnt vote for them based on this. Idiots, complete and utter.

[@sqwilsh]

I agree but I guess the same could be said about the Conservatives latest changes, as it doesn't sound like it had "cross party consensus". Perhaps more gradual changes, with a clearer roadmap for future planned changes would have allowed people to plan and the opposition to consider their long-term position.

[@MRAROCKERDUDE]

@@sqwilsh I couldn’t agree more

[@ChrisShawUK]

I wonder whether abolishing (rather than just raising the limits) makes it harder to reintroduce? All the machinery to track crystallised and uncrystallised pots will be removed so in two tax years time it will be difficult to know where people are in drawdown

[@MRAROCKERDUDE]

@@ChrisShawUK Good point. Someone pointed out that the political reality of a reintroduction might just be too much if Labour do make it back in.

[@nortonr]

I'm 52 now, looks like I'll be putting a lot of savings into my pension next year to get more tax back

[@MeaningfulMoney]

That’s the spirit, Roger!

[@rogerandout808]

This really confused me as I'm only 44 ... but I too will be putting more savings into my pension 😂

[@nortonr]

​@@rogerandout808 Roger, Roger

[@Munkfish-TV]

@@nortonr Roger²

[@PARKLANE84]

Yup

[@VVattonEarth]

In my company pension there is a set percentage I have to put in, there is a set amount my company puts in. I make Additional Voluntary Contributions… there is the ability to add one off bonuses… and then there is this bit that I don’t understand…. I can make “extra” contributions as either salary sacrifice or gross. Here is the question why would someone choose to add extra contributions and not add to AVC’s?

[@terrybrown3486]

Paying via salary sacrifice saves you and your employer NI contributions. Well worth considering if you can afford it.

[@VVattonEarth]

@@terrybrown3486 i understand that… but why is there both the option to salary sacrifice as AVC and also salary sacrifice into the main pension? Why would anyone choose to not use the AVC option. I just do not understand why the option is there?

[@marksawyer6242]

An excellent policy move to widen wealth inequality in our country. Will definitely be ditched if Labour win the next general election. Surely there are better ways to encourage Doctors to stay in the NHS that don't give a blanket tax break to all of the highest earners?

[@jamessaddler1]

Great video. Complete scrapping of the LTA was certainly a surprise!

[@owensmith7530]

This LTA abolishment only helps those who are ready to retire before the next General Election and can take advantage of the situation if they have a pension above the LTA. The rest of us have to assume there is at least a 50% chance of the next government restoring the LTA, though at what level is less clear. If the LTA had been index linked correctly since it was first set at 1.00M it would now be 1.8M and that figure makes a lot more sense. Probably would have been better for the country if Hunt had just changed the limit to 1.8M because the chances are Labour would have left that alone. But of course none of these politicians care about the long term these days.

[@dudleyjoseph9485]

Trouble is, Labour will reverse all this when they get in at the next GE!

[@terenceperera3156]

I would benefit from this but it's not fair , so happy for the next Labour govt to reverse this.

[@ataylor3684]

My civil service employer is my pension. How extra can I contribute into private pension or is a SIP better. Thanks for advice

[@Weakeyedominant]

There needs to be more pressure applied to MPs to overturn the grotesquely unfair way child benefit is applied to married couples earning £79,998 Vs married couples earning £60,000 per year. The government may as well just tell people to get divorced and marriage is a financial travesty when it comes to taxes.

[@marco-vs8ph]

Thank you so much for this, very clear

[@vinay4886]

If the LTA is abolished, how will the pension drawdown above £268275 be taxed? Please explain

[@MeaningfulMoney]

As income. Same as it is now…

[@MulberryElmham]

As Pete says Pension drawdown above £268275 will be taxed as income (and so will depend upon how you manage your drawdown). If I understand it correctly previously the excess over the £1073100 limit would have been subject to a 55% tax charge. So now I can crystallise a pension fund of (say) £1,268,275. It will be £268275 tax free and £1m treated as income so subject to income tax. Previously it would have been £268,275 tax free £804,825 taxed as income and £195,175 taxed at 55% (or 25% extra if taken as income). At 55% it would amount to £107,346.25. The £195,175 taxed at 20% would be £39,035 so that’s a saving of £68311.25. I am not a financial adviser and I am happy for someone with more knowledge than me to say this is incorrect. I’m letting the dust settle before consulting my own long term financial adviser. Definitely not making any move until things are clearer and we are in the next tax year.

[@slayerrocks2]

​@@MeaningfulMoney but without the 25% additional tax penalty? What about the 55% on lump sums?

[@MeaningfulMoney]

There's no LTA charge from April 2023, so only income tax rates apply now - no extras at all

[@johndoh539]

Pete, did you do a video regarding the changes to cgt and what to possibly do about it. Looking around your youtube page I cannot find it. Cheers Jim

[@johndyda5673]

Yeah, great if you've got a big pension. Try living on a state pension.

[@MinkieWinkle]

The mad thing is, people everywhere are kicking off about this, saying it is only to help the rich. Do they not realise that for very little effort putting a little bit away each month, that anyone literally anyone will hit those limits. so these changes benefit everyone.

[@garyjenkins3570]

Hi Pete , when do you think we will know if the state pension age will rise to 68 ? I’m 52 now so I’m t would mean an extra year waiting for the state pension , and do you think they will bring it forward to 2037 to 2039 cheers

[@susanmurchie]

in exact same situation as same age, i think the UKG require to publish their decision on latest review of state pension age by May, so could potentially be 10k down on my planned pot if they bring f/w 68 to the worst case , 2032-2034

[@glynnlebrocq6127]

Hi Pete - great overview - struggling to understand DB impact

[@mattjames88]

Does the MPAA include DB schemes too (NHS pension). Ie take the 1995/2008 scheme, continue working and contribute to 2015 scheme - is this restricted to £10k

[@MeaningfulMoney]

MPAA doesn't apply to taking benefits from a DB scheme

[@johnporcella2375]

I am 59 years old. I am due to start getting a very small pension from the Teachers Pension Scheme at sixty. However, I plan to return to work and make pension contributions to the TPS and my own SIPP. Would starting to take a smallish pension limit how much I can contribute going forward? If so, then I can afford not to take my pension yet.

[@sharn738]

I only have a few days left till I turn 40 and there are a few more LISA that are still available. I am self employed. Is it still worth opening an account?

[@MeaningfulMoney]

Yes, absolutely. Even if you put £1 in it, you’ll have secured the account and can pay in until you’re 50

[@johnmoors2549]

Pretty sure many will be un-affected by it, i dream of being able to put £60K a year into my pension, in fact i dream of earning £60K a year full stop, let alone having that as surplus ;-). Great video though Pete, quick turnaround and translated into language i can comprehend, thank you

[@supermankelly]

Yeah, right. Woohoo I can put 60K annually in a pension now. Oh wait, I don't earn 100K+ 😂

[@jocar-1735]

There is no need for a pension lifetime allowance when there is a pension annual input maximum allowance. I am glad it has been scrapped and hope that it has been scrapped for good.

[@MeaningfulMoney]

I agree, John.

[@martindoyle6776]

I am taking income from one of my pensions but I have other pensions pots from which I have only taken the 25 per cent tax free lump sum. Am I now limited to a £10,000 contribution or can I contribute up to £60,000 on the pensions I haven't drawn down on.

[@slayerrocks2]

If you have taken money from a DC pension, and any of it was taxable, you will be limited to £4k MPA, soon to be £10k. I believe taking a DB pension only would not trigger this.

[@ryanwdavies1]

great update ty

[@UK-Property-Tax-Accountants]

Great vide as always - thank you

[@davidrowe8747]

Cue all the haters commenting on people who have been frugal and smart their whole working lives. It can be possible to amass over £1m in pension investments over a 45-year career, considering the power of compound growth and frugality; it's not just the "fat cats" who will benefit from the new pension rules. Keeping a car until it dies of old age, not taking multiple overseas holidays, cooking your own food instead of eating out regularly, keeping the house thermostat down, etc., etc., all can enable someone to pay regular amounts into a pension and amass £1m by the time they retire. (BTW, I don't have anywhere near £1m in pension investments, so this is an objective, envy-free assessment of those who do).

[@andrewwilson7285]

I"m a big fan of your channel, fantastic content. Can I just clarify something. So, let's say (I wish here!) I had 3M in my SIPP when I can start to draw on it, is the 25% on that figure of the 1M figure?

[@twig3288]

1.07m Unless u have protection

[@A14b19]

I did18 years in civil service pension before being made redundant and got 318 in 2015 now it’s 418 and I’m working and sixty not much to live on shame I’m not high earner I pay £97 a month company pension employer pays 76 what about £20-23000 a year earners

[@MeaningfulMoney]

That doesn’t sound right, Gi C. But it does depend on a lot of factors

[@ilonamorland4928]

But it still amounts to them telling us what we can and can't do with our own money!!! They need to get their greedy little fingers out of people's finances!!

[@Dr.JubairsFinance]

Audio quality is second to none

[@MeaningfulMoney]

Thank you!

[@benkgyi]

How can I have my SIPP deducted before my income is taxed as an employee and as a Limited Company?

[@MeaningfulMoney]

You could ask your employer to pay into your SIPP for you - that should work. If it’s a limited company that you own, you could have the company pay in for you.

[@BrianRitchie-qo6dv]

Big Guy, you most certainly know your stuff. You highlighted today's changes excellently. Unfortunately, none of the changes will affect me. Can't win them all. lol Keep up the good work, Brian

[@MeaningfulMoney]

Thank you, Brian!

[@Del640]

What about the average Joe working on only 25-30k income per year?

[@MeaningfulMoney]

What about him? This video might not be pertinent, but there are hundreds of other videos on my channel that are 👍🏻

[@lyn893]

So I’m already a pensioner beyond the LTA and need to crystallise more DC pension but this’ll take me into a level where I start to lose my personal allowance. I was thinking of trying to divert some of my current pension directly into a SIPP to keep below the threshold but been told this may breach rules. Is that true?

[@MeaningfulMoney]

You need relevant UK earnings to contribute more than £3,600 a year gross to a pension. Earnings from a pension do not count, unfortunately.

[@daveeastham8446]

Hi Pete, my wife and myself no longer work and can add £2880/ year to our income release pensions to get the 20% top up from HMRC. Has the £2880 figure been increased in the budget?

[@MeaningfulMoney]

Not to my knowledge, Sean

[@daveeastham8446]

@@tran100hq that’s if you are working and can pay through your payroll.

[@chrisc9406]

The non earners allowance remains unchanged at £3600. The money purchase annual allowance (MPAA) has increased from £4000 to £10000. So a perk for earners but not for non earners. An incentive to work!

[@chrisc9406]

@@tran100hq If you don't work, so not employed or self employed, then the non earners allowance applies which is set at £3600.. This allowance has remained unchanged since 2001. This is regardless of income received from share dividends, state pension or personal pension. The government introduced this allowances to encourage people who did not work but had alternative income or savings to put money aside in a pension for retirement. This allowance restricts 'recycling' of a pension where drawdown proceeds can be contributed back in to benefit from additional tax rebate. Otherwise retirees could live off their state pension and recycle their personal pension! Basically building up a pension whilst not earning year on year by receiving tax rebates. The non earners annual allowance of £3600 restricts the tax rebate to £720 and therefore limits recycling once drawdown has commenced. It also encourages people to work if they wish to contribute more than £2,880 annually into a pension. The non earners allowance of £3,600 consists of £2880 personal contribution + . £720 tax rebate.

[@chqshaitan1]

Great video, its a shame that for the average joe, these changes will have very little/no impact(besides being able to add more to your pension pot after crystalisation, assuming that is not changed between now and when i retire).

[@janeknight3597]

It would have been nice if he had increased the amount that could go into an Isa.

[@1738Creations]

Never have a pension. Opt out of every scheme. They are scams. Take the money and invest it yourself. I'm looking to buy my second house which I'll sell at retirement and have 10x the money I would from a scam pension. Assuming the pension isn't lost during one of the next several banking collapses, which it will.

[@peterlloyd6337]

Brilliant synopsis

[@MeaningfulMoney]

Thank you!

[@chiragpatel1610]

Well, I will strive to salary sacrifice the full 60k for the next 2 tax years. And see what happens when labour most likely win the next election. Would have taken me 3 years under the current 40k max…so I will take any free gift I can get!

[@MeaningfulMoney]

That’s the spirit, Chirag!

[@Weakeyedominant]

Guarantee by the time I come to retire the government will have pushed the age to claim a private pension to 70.

[@caparn100]

It doesn't make any difference to me. I'm only just managing to put in £40k a year to my pension and I am not going to reach £1 million by the time I retire.

[@MeaningfulMoney]

Still making the most of it, caparn- great work

[@derekhaydon4656]

He gave me, in this HIGH EARNER BUDGET, nothing. The sooner this lot are out, the better. I wonder how much they will BORROW this year.

[@Paul_M1BLX]

Great video - Thanks for the summary of the changes. I'm now off to work out if the 20k going to an ISA currently is better off (in full or part) being diverted to the pension to take advantage of the £60k limit.

[@MeaningfulMoney]

Good luck, Paul - that’s the spirit!

[@ttrjw]

Don't worry. Labour say they will reverse this. Aaargh.

[@MeaningfulMoney]

Keeps me in work, Robert! 🤣

[@ttrjw]

@@MeaningfulMoney It's an ill wind....

[@colinmcskeane4703]

@@MeaningfulMoney it would be useful in due course to have video to review options to mitigate this risk e.g in the LTA break we do have - max crystallisation to drawdown, purchase an annuity or combo of both, and skip these BCE events should they be introduced etc. December 24 is currently considered earliest next election date - so there's time 😉

[@TheSkanxsta]

What about non-earners that are currently drawing on a personal pension? Is the max contribution still 3.6k or does that move up reflect the mpaa rise to 10k?

[@MeaningfulMoney]

Still £3,600 I believe

[@TheSkanxsta]

@@MeaningfulMoney Shame. Thanks

[@thepvporg]

How can you pay in to a LGPS when you work outside of the local government?

[@MeaningfulMoney]

You can’t. Why do you ask?

[@mattjames88]

Does MPAA include employer contributions & tax relief too?

[@MeaningfulMoney]

Yes, definitely

[@ianpalmer9795]

Can I now pay into my pension retrospectively to hit the £40k annual cap , where I have been under in the last three years ?

[@MeaningfulMoney]

You could always do that, as long as you have the relevant earnings headroom to do it in THIS year

[@Andrewcampbell-qd5sz]

Is it a good idea and possible, from an HMRC tax perspective, to start taking a pension from a defined benefit scheme while still earning a salary and then salary sacrifice the same £ amount the DB income to top up a separate stakeholder DC scheme and take advantage of the tax allowances and reduced NI contributions my employer adds for me. So I end up with the annual income but a topped up DC scheme?

[@TheSilvercue]

So, If I contribute the most I can in employer contributions (50%) which is about £40k….. I never added more into pension form my own cash because I have already used allowance….now can I pay more of my own money into pension and get some tax benefit or contribution from gov (I think they now I would not as I contribute max through employer contributions….but now?