I got a letter in the post today concerning my personal pension. As far as I can make out, the upshot of it is:
1) The maximum pension I can draw (from the next re-valuation of my SIPP fund, that happens to be now) has been reduced by 17%. I just got a 17% income cut.
2) I don't have to buy an annuity when I am 75.
3) When I die, the inheritor of my pension fund has to pay 55% tax instead of 35%, a hike of 57%.
4) The inheritor can inherit even if I die after 75 whereas they couldn't before.
I might be being cynical, but it seems to me that:
1) In reducing the amount that I can take out of my pension, the government are increasing what will be left when I die, thus increasing their potential tax revenues.
2) What is left when I die will be taxed at a higher rate, increasing their potential tax revenues.
3) Perhaps they are hoping to increase their potential tax revenues, in that if I don't buy an annuity there might be some money left in my pension fund when I die that they can tax, whereas an annuity turns into a pumpkin when I die and thus produces no tax.
Is there a theme here? Do not rely on this blog post for financial advice. Do not make any decision based on the content of this blog post. Have a nice day.