- May 23, 2024
- Posted by: legaleseblogger
- Category: Related News
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**Potential Changes in Retirement Rules**
Hello,
When we consider the term “safe” in the context of investments, it’s not just about the value of investments being protected, but also about the stability of the rules governing those investments. The potential for significant changes in these rules can have a significant impact on retirement planning.
For example, imagine if the “early retirement age” was suddenly increased from 57 to a much later age, such as 67. This could completely alter the timelines and strategies of individuals planning for retirement.
Additionally, there could be changes in the structure of pension schemes, with SIPPs potentially transforming into “British SIPPs” that only allow investments in UK businesses. This restriction could limit diversification and potentially impact overall investment performance.
Moreover, alterations in withdrawal rules could have far-reaching consequences. For instance, if the tax-free lump sum option was eliminated or if withdrawals were restricted for non-UK residents, it could affect the flexibility and accessibility of pension funds.
In such a scenario, having access to tools like the AI Legalese Decoder can be invaluable. This technology can help individuals navigate complex legal language and understand the implications of any changes in retirement rules. By decoding and interpreting legal documents, the AI Legalese Decoder can provide clarity and guidance in making informed decisions about retirement planning.
Thank you,
Bb
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of course anything is possible but your suggestions are unlikely as they stand. I mean the maximum contribution only fairly recently was £40k a year and is now £60k. The lifetime allowance is one that may come back although its not really gone gone – you get taxed on any amount over the equivalent of what the LSA was
– early retirement age may track state retirement age so will go up but it normally is a slow process so won’t jump to 67 (heck the government likely wants to incentivise private investment so having it earlier than state pension may eventually help them phase out state pension but thats years off too)
Rules could change on anything. A 100% tax on ISA’s for example, could happen. Probably won’t.
Can only work on what we have now.
[deleted]
Wouldn’t be surprised if higher rate relief got hit. An easier target politically.
Can the rules change significantly? Of course but that is the same for basically anything so not particularly helpful. I think any drastic rule changes would be telegraphed well in advance and be slowly implemented.
Also bear in mind that the people who care about SIPPs are generally older and wealthier than the general population. These are also the types of people who are more likely to vote. As such politicians are less likely to want to annoy these types of voters.
Regarding the potential changes you’ve mentioned I will give my two pence but this is only my opinion.
1. I think this is almost certain to happen over the next few decades. I think the state pension will continue to creep up and the age you can access your SIPP will go up in line with this. Now if you are 25 this will likely affect you if you are 55 if likely will not so how much you should worry about this depends on your age.
2. I think this is unlikely although I can see British SIPPs with extra benefits maybe becoming a thing similar to the British ISA’s that have been proposed
3. I can’t see them eliminating the tax free allowance but they could limit it so maybe introducing a hard cap on top of the 25% limit.
4. I can’t see them not allowing withdrawals at all that would be a very bad look politically as you would be essentially locking people out from accessing their own money but maybe not allowing tax free withdrawals.
Overall currently SIPPs are often the best way to save for retirement and trying to guess what government policy will be in potentially decades from now is impossible so I wouldn’t be basing my investment decisions on it
Nothing is set in stone but I’d be extremely surprised to see SIPPs becoming investments in UK businesses only.
The idea just doesn’t make sense from an investment point of view, so would be unprofitable for investment firms/platforms to offer.
Hedge your bets:
* workplace pension (if you’re not self employed) for those lovely employer contributions;
*SIPP for the helpful tax relief and growth;
*ISAs for the lovely cheap index funds to invest in to bridge those years between you giving up work and getting access to your pension.
Politics means much can change, however no politician is going to change something so significantly it jeopardises their political career.
Best guess; the age you can access the SIPP may go up by a few years by the time you get there, and the lifetime allowance for your pensions, abolished this tax year may come back in.
Pensions had a big upheaval in 2015. Could happen again. Got a crystal ball?
As mentioned already by others, anything can change but, change happens slowly, not unreasonable as it can have a significant impact on people’s lives.
You mention the age increase, the early access age increase to 57 will have been known publicly for almost two decades by 2028.
Similarly the increase to age 58 has been long understood.
SIPPs becoming British SIPPs is simply nonsense, I would suggest you improve the literature you are reading or your source of information. The desire is to have 5% of a default fund being allocated to the UK. There is also the British ISA in the offing (additional £5k allowance).
I won’t comment on your last two comments because they are literally stupid and (again) I would suggest you change your information sources.
Hi /u/Bb415bm, based on your post the following pages from our wiki may be relevant:
* https://ukpersonal.finance/lump-sum/
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