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The childcare support is almost wholly for the middle classes.
is that just because there are more middle class people than other people? It seems like a fairly even benefit (potentially tapering for top earners). That blog just looks like the mind dump of an angry person, not much though in it
You know income tax at the prevailing rate is payable on pension pots if death occurs before the age of 75, right?
That’s only paying back the tax relief that was given on the pension contributions in the first place. Not an extra tax (compared to if the earner just saved post-tax money to bequeath, as is normally the case).
Must admit it’s been very cleverly presented.
Rather than sorting out an anomaly in the way NHS (and perhaps some other public sector) pensions are calculated, he uses this problem as an excuse to push through a massive tax bung for the richest 1% or 4% (depending exactly what you’re counting) and people on here think - at least claim to think - that it’s all done to help some beleaguered hard-working GPs and will make a significant contribution to the NHS staffing problem.
I expect he’s having a good laugh about it right now.
For me it’s going to do the opposite, it’s another way for me to be able to retire early if I’m now not going to taxed as much. I don’t think that’s what they had in mind but I won’t be the only one.
Drac - that rather assumes the retirement age on self invested pensions doesn't change again. It's about to go up to 58 as it is.
Rather than sorting out an anomaly in the way NHS (and perhaps some other public sector) pensions are calculated,
I don't think theres an anomaly. Its genuinely possible for a defined benefit pension to add £40k of value in a year, without too much sweat, regardless of the calculation.
An index-linked annuity (which is what an nhs pension is the equivilent of) pays out about £4k per year for every £100k you put in. That is to say, if you put in £40k, your annuity would rise by ~£1600.
A defined benefits pension often pays in around 1/50th of your salary in a year. That is to say, if you earn £100k a year (for sake of easy maths), after 1 year your pension would be worth £2000 per year, after 2 years it'd be worth £4000, and so on. You'll note that each of these number is more than an annuity bought with the £40k limit.
the nhs pension is 1/54th - so if you earn over £86k, a 1/54th pension would put in more than £40k "worth" of pension to your pot. The maths above aren't how things are calculated (its a bit more convoluted), its just a demonstration to show how generous defined benefit pensions really are - the calculation of the value isn't far off.
the reason they removed the lifetime cap is also similar. If a doctor works for 40 years on an average salary of 80k, they've got a pension of pretty close to £60k when they retire. At normal annuity rates, that's worth £1.5mm. Both caps needed raising to avoid issues.
Drac – that rather assumes the retirement age on self invested pensions doesn’t change again. It’s about to go up to 58 as it is.
I intend to work to I’m 58 I’ll take the hit in going early.
its just a demonstration to show how generous defined benefit pensions really are
Indeed.
This seems to be the core of the issue.
I'll ask again - are we ok with a retirement income for a doctor that is higher than a nurse earns at the peak of a full time career?
I’ll ask again – are we ok with a retirement income for a doctor that is higher than a nurse earns at the peak of a full time career?
Yes because it’s a completely different job.
Every nurse has the opportunity to retrain to become a doctor, just like Mrs FD did.
Just a point on 5labs point about defined benefit schemes
Never heard of 50ths. Mine was 80ths and the new NHS at 54ths is career average and gives a lower pension than 80ths of the previous. I suspect the idea that a doctors pension will be £60 000 pa highly suspect. Career average and they will have spent many years earning way less than a consultants salary First couple of years on less than a shop worker and almost no one gets the full 40 year. Very unusual to be a consultant before being in their 40s
I have no problem with some of us getting decent pensions - the problem is not that - its the horrifically low pensions most get
I’ll ask again – are we ok with a retirement income for a doctor that is higher than a nurse earns at the peak of a full time career?
Very unusual that would happen - 5lab has misrepresented what folk get. Most doctors are not consultants with high merit awards
Very unusual to be a consultant before being in their 40s
Not the experience of the vast majority of consultants my wife works with
MId 30s then. IIRC its 12 years training to become a consultant minimum. So 30 is the youngest possible and most folk do not take the minimum time. similar to GPs - so the career average is not based on 40years at a high salary but somewhat less.including some years on a low salery
Never heard of 50ths. Mine was 80ths and the new NHS at 54ths is career average and gives a lower pension than 80ths of the previous
50ths is typical of a average salary defined benefit scheme, and was an example to give easy maths. a quick google suggests the nhs is on 54ths (which is used for later calculations), the civil service is on 43rds, teachers are 57ths, etc
almost no one gets the full 40 year.
which is why they're removing the pension caps. it takes 5 years to do a medical degree so you can start your career as a trainee doctor at age 23. there's no reason for someone not to have a 40 year career after that. Its hard to get average figures for doctors salary, but even if its "only" 65k over 40 years they're still getting a £50k pension plus a further £10k as a state pension. 60k total.
Doctors pay scales are available. they will not be earning high wages until well into their 30s
You misrepresent the potential lifetime average earnings grossly
civil service 43rds? Its changed then ';cos the civil servants I know were 60ths
Never heard of a DB scheme thats 50ths and certainly not typical
there’s no reason for someone not to have a 40 year career after that
Burnout. Very few will work 40 years full time.
As a reg you’ll earn 50-60k easy. And by your definition that must be a high salary as that would make you rich
teachers are 57ths, etc
when did that happen? My teachers pension is an 80ths scheme.
Pay scales for those that want to see the reality, 11th year of post grad training they reach £53 000 by which time they will be 34 minimum
That doesn’t take into account the banding
Burnout. Very few will work 40 years full time.
nice for them to have such a healthy pension they can afford to retire early, eh? Or I guess they're doing lots of overtime which will bump up their salarys some more..
when did that happen? My teachers pension is an 80ths scheme.
yours is probably final salary (earlier scheme), 57th is probably average salary (later scheme).
Pay scales for those that want to see the reality, 11th year of post grad training they reach £53 000 by which time they will be 34 minimum
after the end of that scale, what happens? if they become a consultant, on the pay scales here
https://www.bmj.com/careers/article/the-complete-guide-to-nhs-pay-for-doctors
they have a career average salary of £84117, which means £70k pension after the state pension
if they become a GP it seems the average salary after that is £100,700 ( https://www.gponline.com/average-gp-pay-rose-28-england-2019-20-faster-uk-nations/article/1725154 - probably a bit more now) - which would put their career average salary a touch lower at £81,058, either way taking home a >£60k pension (plus state pension, so £70k) if they stick it out for 40 years.
a 60k private pension has a lifetime allowance calculation value of ~£1,500,000. If you follow those career paths, your pension was (before today) taxed heavily after your 31st year, which is probably why so many docs quit at that point, when they've got lots and lots of experiance.
maybe the retired doctors you know don't have a lifestyle which represents what in your mind's eye is rich?
I'm not having a go at doctors having a large pension, good on them, but defined benefit pensions are, in certain jobs, easy to rake up and worth an absolute fortune.
nice for them to have such a healthy pension they can afford to retire early, eh? Or I guess they’re doing lots of overtime which will bump up their salarys some more..
Overtime doesn’t go towards your pension.
Very unusual to be a consultant before being in their 40s
Maybe at one time but certainly not in the last decade.
Jambo - I am pointing out that 5lab is grossly over representing the lifetime earnings and grossly over estimating how much folk willget out of a DB pension.
Of course a consultant or a GP is rich - they are in the top 1% of earners
Many commercial DB schemes were on 60ths and that progressively became 80ths as the actuarial maths added up to a massive liability and then they became career average (which gives an outcome closer to DC calculations). Thing is, if you remain in the NHS and (many public sector jobs) you tend to stay in the same scheme thereby racking up the years worked elements; change jobs in the private sector and it is has long been easy to lose cumulative years.service.
Of course a consultant or a GP is rich – they are in the top 1% of earners
Top 1% of earners you say. Is that a FACT?
change jobs in the private sector and it is has long been easy to lose cumulative years.service.
If I changed employer I’d lose mine too, so not unique to the private sector.
Top 1% of earners you say. Is that a FACT?
Yes - I put a link to percentiles of earnings in the UK earlier
Facts, alternative facts, opinions presented as facts.
Yeah, apart from the average GP wage doesn't put them in the 1% - and regardless, even if they were then many of them could well be HENRYs.
High Income Not Rich Yet.
But if you earn 60k you're "rich", apparently.
Frank / chevy- the link to the percentiles is there if you want to see it
£60 000 puts you around the top 10% of the country. 100 000 around the top 3%
apologies - I seem to have misread it 100 000 is top 3 - 4% not 1 %
For accuracy... only the 'basic pay' for junior doctors is pensionable. All banding/out of hours work etc which does generate a pay premium is non pensionable. As such for those graduating now with 80-90k debt the NHS pension looks very different as it is career average not final salary.
The issue for many at present is they will have some pension in 1995 (final salary scheme) and some in 2015 (career average). You can generate a theoretical >40k pension increase as a year one consultant due to the difference in pensionable pay from registrar to consultant. You pay in nowhere near 40k but the scheme thinks the pot has risen more than this in a year as the theoretical value of the pot (that doesn't exist) at retirement has grown more than 40k.
It is also incredibly difficult to work out if you will breach the limit each year without a complex algorithm that even a lot of accountants and IFAs don't understand.
Point that NHS pension very generous is entirely valid, but something had to be done as for some consultants it made more financial sense to retire than to work as they would be better off overall to retire than to keep working - that doesn't make sense on any level when waiting lists are at a record high.
It makes a lot of sense to make it worthwhile for more experienced clinicians to work longer in the NHs.
One reason for that is that if we want to train a lot more doctors to reduce workload pressure we first need to secure additional
training capacity in med schools and for supervision etc when practicing.
Most civil servants will have spent the majority of their careers on 80ths, certainly not 54ths, @5lab.
Currently pretty much everyone is on the alpha scheme on 60ths; no-one gets 54ths, I've never heard of that figure.
Can you give us an example of a civil service role where that might apply, please, I'd like to trace that figure?
It's also worth bearing in mind that now we're into career averaging and the inclusion of a cunningly incorporated lump of non-consolidated pay every year, means that civil servants receive a pension that is calculated on a figure significantly less than their true final salary.
The previous pensions tax free limit is being described by some as a dis-incentive to earn, as if a pension is the only way that you can utilise excess money that you are lucky enough to have..!
What seems to be getting less attention than these obscene pension tax breaks for the rich, is the tax burden and increases for the less well off. NICs are an income tax on the poor, starting lower and cutting off at the higher paid, effectively relief for the better paid.
Secondly, not lifting the earnings threshold for income tax, staying at @£12.5k. So this year, that brings in more of the poorest into a tax trap. nice.
Most civil servants will have spent the majority of their careers on 80ths, certainly not 54ths, @5lab.
Currently pretty much everyone is on the alpha scheme on 60ths; no-one gets 54ths, I’ve never heard of that figure.
I took the 43rds (I might be wrong), from here, which suggests
If you earned £22,000 for 20 years, you could have an annual pension of £10,208
if you divide the £10,208 (pension) by 20 (years accrewed) you get £510.40, which is 1/43rd of £22,000
80ths is probably final salary pension rates vs average salary rates of a higher number. 43rds does sound very generous though.
It would be interesting to see how many consultants get death in Service compared to other industries, I bet it is higher than many other occupations. Its anecdotal, but Mrs FD often says she has heard of x who has recently died in there 50's/early 60's. There is no linking evidence, but I have yet to see other industries where people work so many hours under such stress both mental and physical.
Mrs FD is mid 40's she has already said there is no way she will still be able to operate on people aged 68 just because of the physicality of the job. Personally I am not sure I would want her operating on me at aged 68.
Anyhow I see the lifting of the annual allowance as sensible. The no top cap, I am kind of on the fence with. In theory the annual cap will stop the 'super rich' just dumping money there and enable the 'rich' to keep working to 68 and keep growing a pension pot.
The previous pensions tax free limit is being described by some as a dis-incentive to earn, as if a pension is the only way that you can utilise excess money that you are lucky enough to have..!
It's not that. I enjoy my job but I value my free time more. I imagine everyone else is similar. So if the choice is between going into work for less than half-pay or just having a day at home, it's pretty obvious what someone is going to choose.
Starmer has said that the LTA will be re-introduced if Labour are elected in 2025, but with a special exemption for doctors. I'm not convinced that this will work legally, as I don't see what makes a doctor different from other high earners as far as paying tax is concerned.
In theory the annual cap will stop the ‘super rich’ just dumping money there and enable the ‘rich’ to keep working to 68 and keep growing a pension pot.
due to the tapering of the annual cap, the super rich can only put in £4k per year.
labours stance is a bit disappointing
She says Labour will force a vote on this, and would reverse the policy - though says that it should be kept in place for doctors.
"fixing" this for one profession because that profession has high visibility is a poor show. The worst policies any government can put in is one that excuses itself from the policy.
I’m not convinced that this will work legally, as I don’t see what makes a doctor different from other high earners as far as paying tax is concerned.
Legally yes there may be an issue - however I think it is because doctors salaries fall within this banding of £120-160k. I would imagine that if you look at other government services, salaries are either below this bracket or above it. (Certainly NHS Management is). And private sector has free rain to pay above to negate the losses.
I’ll stick my head above the parapet and state I’m one of the 1% who will benefit from both the change in annual allowance and the lifting of the cap. Recently we’ve been lucky enough to be able to put the maximum allowance in both mine and my wife’s pension with the aim of retiring with about LFA in both. I acknowledge that makes me rich, but we prioritise this over other things. I suspect I have one of the lowest car/mtb value to salary ratio on the forum.
In theory I could change the ratio of how we split the pension payments to get me out of paying the 60% tax between 100-125% as it doesn’t matter which pension we build up now as there is no limit. The risk is that labour will reimpose the limit and we end up in a worse position so I won’t do anything until we see what labour plan I suspect they will reintroduce a limit but higher than before. From a personal point of view I don’t agree with the changes as I don’t need a tax break.
I would say it’s not just consultants that are hard to retain or recruit. I work for one of the worlds biggest companies doing work that saves peoples lives and have just run two global recruitment campaigns from the level below me and the one below that both offering six figure salaries and I managed to get 3 people 1 in the UK 2 is the US with massive salaries uplifts over existing staff to get them. If the cap is reintroduced I will consider retiring earlier or going part time. The people that could replace me externally are likely to be in a similar position and either not want to work or need huge compensation to make up for the tax hit.
Personally both my OH and I benefit from this change, but we wouldn't vote for it.
Yet more shifting of the tax burden downwards.
And private sector has free rain to pay above to negate the losses.
Yes, as does the NHS.
the weird thing about the cap is its the tories who've continually reduced it (both directly and compared to inflation) since it was introduced. if the caps from 2011 had been tracked relative to inflation it'd be £2.8mm lta and ~£77k annual contributions today and wouldn't be an issue
Yes, as does the NHS.
How ? The NHS has very structured pay bands based on competency. It is impossible to pay an NHS employee out of that structure.
How ? The NHS has very structured pay bands based on competency. It is impossible to pay an NHS employee out of that structure.
Because they 'own' their organisation and pay rules - and if it's "impossible" then they've created this.
No difference to any other company or organisation.