Pension boon

[Beef Oven!]

The personal allowance for those born after 5-4-1948 is £10,000 for this tax year. 30 hrs per week at minimum wage is £10,140. A single person, not disabled, over 25 years old, working 30 hrs or more per week can claim Working Tax Credit. This is income related, but those earning less than c £12,500/£13,000 and meeting the criteria above will get something. A single person meeting the criteria above and earning £10,140 pa would get c £23 per week, and that is not taxable. There are different rules for those responsible for children, disabled people, and those over 60.

Why base it on 30 hours?

Should be based on a full time job - 40 hours - £13.5 pa

[ardcarp]

Ref personal pension plans not being true pensions, surely it depends on what happens to the proceeds of the plan when (now if) invested in an annuity and one has annuity choices these days. Just like occupational pensions ie defined benefit pensions, it is perfectly possible to buy an annuity that is increased annually in line by an agreed % which may exceed or undershoot inflation, or to buy an index linked annuity to keep pace with it. For most though the defined benefit scheme was better though generally more expensive for employers, hence its near demise.

Let's leave aside the recent 'rules', and assume that you are going to rely on an annuity. You have to stick huge amounts into a personal pension plan over a long period of years to be able to buy an annuity which will match even a modest occupational pension. If you go for the % annual increase option, you get, of course, a much lower monthly sum to start with; and as I understand it the 'index-linked' variety gives you a much, much, much lower starting sum. The actuaries will have worked out how likely you are to die before your 'pot' is used up...and naturally, they're on the winning side by a big margin.

There is one fact which is not widely understood about (the pre-annuity-buying stage of) Personal Pension Plans. When the insurance company running the sdheme says they are going to charge (say) a 1% management fee, you think, 'Ooh how reasonable, that's not much', thinking that it means they will take a mere 1% from your monthly payments. So you stick in £200, and they take £2. Not bad. It doesn't mean that at all! It means they will syphon off 1% every year from your pension pot. So if you have amassed, say, £200,000 as you approach retirement, they will have been poketing in the region of £2000 annually from it!


And then there's annuity rates which have plunged in recent years. Had I bought my personal pension annuity five years earlier (i.e. with a lower 'pot') I would now be getting more. So it's a big lottery.

[ardcarp]

Relatives etc. providing care can apply for Carer's Allowance.

My apologies. It was Carer's Allowance I was referring to (and which was not payable to our friend because she is in receipt of State Retirement Benefit.)

[Eine Alpensinfonie]

I can perfectly understand people being irked by the sometimes-arrogance of London dwellers, but it should not get in the way of the facts. London is a very different kettle of fish from the rest of the country. That's not to say that life's that much easier elsewhere, unless one is comfortably off.

I always thought London was part of the country - not somewhere different.

[ahinton]

I always thought London was part of the country - not somewhere different.

It is - and I see no evidence that anyone here was seeking to suggest otherwise - but we surely all know just how much more expensive so many things are in the capital than they are elsewhere in the country? - just as in most capital cities, in fact...

[mangerton]

Why base it on 30 hours?

Should be based on a full time job - 40 hours - £13.5 pa

I don't think it's "based" on 30 hours. In April the personal allowance increases to £10,600. We don't yet know what the increase in minimum wage (due in October) will be. Of course, there is an election before then.

Bearing in mind that lunch is not normally included when reckoning working hours, very few employed people these days work a 40 hour week. 36 or 37 is more usual. In addition there are many people who work part time, and then again there are the ever-increasing numbers of people on zero hours contracts.

[Beef Oven!]

I always thought London was part of the country - not somewhere different.

You are correct. But we are not talking about geography here. We'r talking about the cost of living.

[Eine Alpensinfonie]

You are correct. But we are not talking about geography here. We'r talking about the cost of living.

I see what you mean, but that often feeds upon itself, and increases the divisions between north and south. In reality, it's only property that costs more in London and the south-east. The stuff in the shops is pretty much the same.

[ferneyhoughgeliebte]

Why do you choose £10k?

Because that's the Personal Allowance on Income Tax - if someone earns less than this per year, then they don't pay any Income Tax.

[Beef Oven!]

I don't think it's "based" on 30 hours. In April the personal allowance increases to £10,600. We don't yet know what the increase in minimum wage (due in October) will be. Of course, there is an election before then.

Bearing in mind that lunch is not normally included when reckoning working hours, very few employed people these days work a 40 hour week. 36 or 37 is more usual. In addition there are many people who work part time, and then again there are the ever-increasing numbers of people on zero hours contracts.

The average working week in the UK is now 43.6 hours compared with a European average of 40.3. The French do well with a limit of 35 hours!

Working hours in the UK are going up, year on year.

Even an increasingly rare 9-5 job at 37.5 hours a week gives a salary just 200 pound short of £13,000 per annum. And I have always assumed that we are talking about paid hours, which excludes lunch-time.

An average UK working week on the minimum wage hourly rate gives an annual salary of £14,776 pa.

[ahinton]

You are correct. But we are not talking about geography here. We'r talking about the cost of living.

Indeed so - and it's higher in London than elsewhere in the country, especially where housing costs are concerned, just as is the case in most capital cities, methinks.

[ahinton]

I see what you mean, but that often feeds upon itself, and increases the divisions between north and south. In reality, it's only property that costs more in London and the south-east. The stuff in the shops is pretty much the same.

In most of the shops, perhaps, but look at public transportation costs; surely these are higher in London than in most if not all other parts of the country? - and, in any case, the differences in property prices between London and most other places ecxept perhaps Poole are enormous.

[Eine Alpensinfonie]

In most of the shops, perhaps, but look at public transportation costs; surely these are higher in London than in most if not all other parts of the country? - and, in any case, the differences in property prices between London and most other places ecxept perhaps Poole are enormous.

Re public transport, the difference is not in the cost - more that in the SE, the Beeching Axe hardly applied at all, so public transport is excellent, whereas it's patchy elsewhere. The cost differential is not significant, especially with Oyster cards and the like.

[Beef Oven!]

Indeed so - and it's higher in London than elsewhere in the country, especially where housing costs are concerned, just as is the case in most capital cities, methinks.

Indeed. Taxis, restaurants, buses, trains, cinema tickets, food shopping, football match tickets (Man Utd much cheaper than Chelsea and Arsenal for example), clothes, school-trips, school dinners and so on, and so on!

It's called the cost of living and it's not limited to just house prices and rents (which is enough on its own anyway).

[Anna]

According to the latest press release from the Halifax the average price of a house in London is 76% higher than the rest of the UK - but if you disregard housing and the higher cost of commuting London is only 7% dearer to live in than Manchester!

As for working hours per week - I'm afraid I've never worked more than 35 hours per week, so if I were minimum waged (which thankfully I've never been) that would mean £11,830pa. Also, many supermarkets and retail outlets employ staff on 4 hour shifts totalling 24 hours per week, this means they (the employers) don't have to pay NI so in effect it's cheap labour for them and workers can then claim tax credits (which is really a cockeyed system when you think about it isn't it?)