Somethings really really get me going, and this is all about .the con that is so called “Pension Freedom”.
And it is bugging me because I know it will affect me in a few .years time.
And it is going to affect you as well, if it isn’t already.
Pension Freedom is a complete fraud in my opinion, its just an excuse for the Treasury to go raiding OUR savings.
Whatever you take out from your pension fund gets subject to the same treatment as if it was income.. take out £50,000 (for example) and a chunk of it will be taxed at 40% !
If you are earning £50,000 a year and you want to take some cash out to invest in property or anywhere else that gives you a better return – then the bad news is that pretty much all of what you take out will be taxed at the higher tax rate.
OK, so you leave the money in your pension fund.
But hang on, the size of your pension fund you could build up has now been reduced.
The small print in the budget reduced the tax free size of your pension fund down to £1 million.
sounds a lot but right now that pension fund would maybe give you a retirement income of about £20,000 a year.
And guess what ? you would pay tax on half of that !
So let me state now, for the record.
I object to have to pay tax on the income I set aside for a pension (my parents didn’t – that was totally tax deductible in their day)
I object that the profits (growth) my pension funds make, being taxed (thanks Gordon Brown !)
And I object to having my pension fund being taxed yet again when I take the money out !
I object that the size of my pension fund is being restricted ( and my payments into it) so that I am going to be made to live in poverty when I retire.
And the real kick for me is that the people who are not affected by this are the few people in final salary schemes.
These include the Civil Servants that thought up this triple taxation plan on OUR savings.
And the lying b£$€tard politicians that voted for it and put it into law.
So what can you do ?
Well for me the only solution is to invest in income generating assets that will provide you an income in your retirement.
And I do not mean property – or rather just property.
The day of the buy to let bonanza have gone.
Rental property prices have gone up and when interest rates go up many wannabe landlords are going to find they have bought over-priced properties with a mortgage they can no longer support.
I haven’t really worked out the best option for creating income generating assets and what they are.
But when I do I will let you know.
One things for sure, the pension safety net that our parents knew isn’t there any more.
You and I are on our own.
So if we don’t want to die of starvation, hypothermia, or an illness that is too expensive to be treated on the NHS then we had better start making some extra money NOW.
Live long and Prosper.. ( as Spock would have said).
Sarah