Saturday, 13 February 2016

Nonsense on so many levels


1. It's total nonsense that higher rate taxpayers are not 'saving enough'.  This 'study' (or whining) only looks at pensions savings.  What about ISA's?  Owning a house that has inflated in value? Just buying some unit trusts.

2. Chris Noon: "Higher rate taxpayers will not save as much in their pensions because it is not as efficient for them…"" Cock. They'll just have to save in something else. Who's stopping them? But he does go on to say that these people are paying enough tax", as of course is everyone else.

3. "At present basic-rate taxpayers receive a £20 top-up from the Government for every £80 they pay into a pension." No. It’s not's a top up from the government. The government has no money. It is a rebate of the savers own tax payments.

4. It says that every taxpayer – basic, higher and additional rate are not saving enough for an adequate pension.  So the tax regime already fails to incentivise saving.  Or the authors are failing to include other forms of ‘saving’, unearned land price rises included.

Hymans Robertson have a vested interest in all this alarmism – they make money rent from all the higher rate pension savers.


Random said...

I agree this is nonsense. But George Osborne wants to reduce the deficit. Lower savings = lower deficit. You get what you vote for.

"It’s not atop up from the government. The government has no money. "

It is. It's the government's money. The government is the issuer of Sterling.

Random said...

"So the tax regime already fails to incentivise saving."

Why would they want to do that? That causes a paradox of thrift effect.

Lord Osborne of Hard-of-Accountingland won't get to a budget surplus until there is people are borrowing more than they are saving overall. The Sectoral Balances are quite clear on that matter. There is a corporate surplus over investment and a trade deficit.

Because that's what drives the process, not predictions by the IFS.

There are savers and a conservative government. The conservative government won't expand government spending to offset the saving.

Don't you know how important it is to reduce our national debt :)

Lola said...

R back NMT again. So, wrong I'm afraid.

Mark Wadsworth said...


1. "Encouraging" people to save by favouring one form of saving (private pensions) probably only increases actual private saving by a small fraction of the cost/value of the tax break. So it is terribly inefficient in terms of reducing pensioner poverty.

2. The cost value of the tax break is fairly huge, enough to get rid of higher rate income tax, for example, and costs nearly as much as the basic state pensions paid out.

3. Most of the value of the tax breaks are soaked up by the likes of Hyman Robertson.

mombers said...

Surely the purpose of any incentives is to provide enough private income to prevent OAPs becoming a burden on the state? If so, it doesn't matter what the person's income in their working life was. That said, I am a bit miffed that my enormous tax relief is all but certain to be cut :-(

Mark Wadsworth said...

M, yes that is how they always justify it but it is complete and utter horseshit.

Cost of basic state pension - £50 billion a year.

Cost of second state pension - £40 billion.

Cost of Pensions Credit top up for pensioners with no SSP or private pension, associated housing and council tax benefit approx. £15 billion.

Cost of pensions tax breaks - £40 billion.

Number of pensioners currently NOT claiming top up benefits who would be claiming them if it hadn't been for pensions tax breaks - very, very few indeed.

Reduction in cost of pensioner top up benefits because of pensions tax breaks = very very small.

So it is fucking awful value for money and targeted at the wrong people imposing higher taxes on everybody else.

Bayard said...

There's a very tax-efficient form of pension saving called under-occupation. Live in a house that's bigger than you need, trade down when you retire and bang, a huge lump sum is yours with no tax to pay. Doesn't work if prices are going down, though, but hey, that only happens every eighteen years or so and you can always trade down for the crash, too.

Mark Wadsworth said...

B, sadly yes.