The original Question was should people be permitted to Draw Pension @ 50.
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Definately the answer must be yes,if the folowing applies.
1. On starting the Pension Fund that it was clear they could retire on pension @50+.
Otherwise no-one dare trust that what they sign up for today is safe in the future.If long term decisions are not ring -fenced , why would anyone sign up for something that could be changed at the whim of Government.
{Eg I consider the Pension Fund Levy to be grossly unfair and it sets a dangerous precedent.}
It may Gall that someone used the system to (avoid) taxes at the time they set up their fund . but to now penalise would be just wrong.
I see your point, but that same logic could be applied to eliminate the Pension Levy (aka salary cut) that was applied to public servants. It could be applied to any planned change to pension rules. I don't think any Govt can be frozen into inaction on changing bad laws.
Red herring. Nobody gets to retire early because they have some "influence over the trustees". Either the scheme allows early retirement or it doesn't. You seem to be under the misconception that if one is in a senior position or a director of a company, or indeed is a pension scheme trustee, that somehow this means that the clearly-defined rules governing what a trustee can and cannot do can somehow be circumvented for personal gain. They can't.
I see a number of pension providers highlighting early retirement options as important product features for Directors pensions and SSAPS, so some of those in the industry seem to feel that it is certainly a benefit for those who are largely in control over their own pensions.
In practice the only people who are disallowed early retirements are those in Defined Benefit schemes where early retirements would have an adverse financial impact on other members of the scheme.
So your example of Mr A and Mr B is also wrong, in that either one would be permitted to leave early.
OK, so for the sake of arguement, let's say that the ACME pension scheme is a DB scheme, and Mr A is a member of the DB scheme.
Why should the state give Mr B a tax break to save for his 50-65 years that is not available to Mr A?
Just because there is no real tax benefit for something isn't a good enough reason for it to be banned by law. The current regime allows people to make choices that may suit their lifestyle. Do you want to take that away even though it would not benefit the exchequer?
Just to be clear, it's not about 'banning' early retirement. It is about removing the current tax break for early retirement.
People are welcome to make their own lifestyle choices, but why would they expect a tax break for it?
Example - person works 60 hours a week. At 55 he decides he'd like to cut back on his hours and spend more time with his family. Financial commitments dictate that he cannot afford to give up work altogether. So he leaves his present job, takes up a new job at a lower rate of pay but less hours and supplements his income by drawing down his pension early. He's still paying 41% tax on his pension and part-time income combined.
While he's still paying tax on his pension, he benefited from growth in the tax-free contribution, an option that is not available to other people. You could apply to same logic to the situation many young parents find themselves in their 30s or 40s dealing with reduced salaries and extra expenses for young children. Or to people who lose their jobs at any age. Or to anyone who's going to college to study and has little/no income. Do we allow all of these to draw down any pension contributions that they've made tax free? If not, why not?
I just don't who would be the winner by banning early retirements / continuing to work. I can see only those who would lose out.
The winner would be the State, as people would be less likely to avail of the tax break on pension contributions that are really just savings for their middle years, rather than true pension contributions.
The loser would probably be the pensions industry, with reduced commission income.
Let's step back for a minute and assume we are working with a blank sheet of paper, designing a totally new pension system. Why would we give people a tax break in their 30s and 40s to save for their 50-65s?