If there’s one thing we ought all to have learned by now, it’s that few governments around the world gave a thought for the long-term when it came to Covid. In the United Kingdom, the reckoning has arrived in the shape of a massive tax bill which seems to have no end in sight. In Malaysia, the economy is in dire straits after the government advised its citizens to cash in their pensions to survive having to stay at home during the pandemic. It’s left the nation with a looming catastrophe. The Telegraph has the story:
With no furlough scheme and limited help from the government, [Malaysians] were forced to dig into their savings to survive. Many raided their pension pots after the rules were made more flexible to allow people of any age to withdraw money to survive lockdowns.
They took out billions of pounds, using their pension as a cash machine. Now, Malaysians teeter on the brink of disaster. Many have exhausted their retirement savings and now face living out old age in poverty.
It seems the Resolution Foundation think tank believes this was such a spiffing idea, it should be introduced in the U.K. Here’s the Telegraph’s summary of how the Malaysian system works:
Workers put in 11% of their salary and employers more than match it, making defined contributions of at least 12%. It is also considerably more flexible than those of many higher income countries.
The ‘two pot’ system has a second account, worth just under a third of the total, which can be used to buy a house or pay for education and medical expenses. The rest is locked away until it can be drawn down at age 55.
During the pandemic, millions of Malaysians were permitted to make four rounds of cash withdrawals from their pensions, totalling RM145 billion (£24 billion).
But urging Malaysians to cash in their pensions hasn’t turned out well:
With each round of pension raids the public demanded more, amid limited direct government support.
Now, millions face being unable to afford to retire.
Geoffrey Williams, an economist at the Malaysian Institute for Economic Research warns:
In the UK, it would likely lead to millions having inadequate savings and becoming reliant on the state pension and benefits with obvious implications for government spending, borrowing and higher taxes.
The Malaysians don’t even have the cushion of the state pension. And in the U.K. there’s talk that the pensionable age will have to rise to 71, and even then that it’s so costly the nation faces destitution if it carries on paying state pensions at the current level. Square that with the Resolution Foundation’s recommendations – if you can. The answer is simple. You can borrow from yourself. The Telegraph again:
The think tank’s report calls for savers to be able to have a “borrowable” fund in their pensions, of £15,000 or 20% of their pot, whichever is lower, to be paid back across with interest over a period of several years. It would essentially give every worker a ‘rainy day’ fund to fall back on.
You’re on your own then. Good luck.
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There has already been talk of government forcing pension and life assurance funds to put money into ineffective, tax payer dependant wind farms and solar arrays. There seems not to be enough cash willing to support these ventures.
Watch out for your pension. Watch out for any business whose pension schemes might be forced to do this because they will, in effect, be government controlled and the cash they are forced to put into uneconomic ventures will be an alternate form of taxation.
“If there’s one thing we ought all to have learned by now, it’s that few governments around the world gave a thought for the long-term when it came to Covid.”
It depends what the author means by “give a thought for the long term”. Nothing will convince me that governments did not know exactly what would happen – they just didn’t care, or it was deliberate. I do accept that plenty of the general population think that free money is a thing.
“…it was deliberate.”
No question about it tof.
The Davos Deviants are determined to reduce nation states to utter poverty. Everything is being geared to increase taxation and the cost of living. One way or the other governments are determined to take our money / wealth and it won’t make an ounce of difference which flag the party is waving.
Money allows a degree of freedom and control and that cannot be allowed in the New World Order. So the pressures on our personal finances will be ramped up particularly after the election and of course it will all be in aid of saving the planet, for our own good and all that.
There does not seem to me to be a way out other than by force – a mass uprising.
Blimey, pigs really have started flying.
How much better off we would all be if the Government kept its nose out of people’s affairs
https://pension-life.com/top-10-deadliest-pension-scammers-hmrc/18/02/2018/
Yes, you read correctly, HMRC is our number-one culprit in the Top 10 pension scammers list. And here’s why:
Since at least 2010, pension scams have been on the rise. That’s 8 years, yet regulations have not been changed, HMRC has not become vigilant or conscientious about registering pension scams, and new laws have not been put in place to stop scammers.
In fact, the scams are registered in the first place by HMRC, and in the case of occupational schemes also by tPR.
No notice is taken of whether the schemes are registered by known scammers and no questions are asked as to the purpose of the schemes….
Therefore, HMRC takes 1st place, due to its downright lack of motivation to help stop the scams, yet speedy tax demands fly out for the unauthorised payments arising from the so-called “loans” operated from the very schemes that HMRC themselves registers.Furthermore, HMRC taxes the victims of pension liberation scams – and not the perpetrators.
This is utter rubbish. There are a raft of regulations in place which place the onus on ALL registered pension schemes to ensure scams cannot happen – the fact they do is entirely the fault of those organisations who run them – not HMRC or TPR. “Unauthorised payments” is a very prescriptive regime. and not well understood.
A fool and their money are soon separated – never been a truer statement imho .
The Australian Government brought in a similar scheme during lockdown. I know because my daughter a working midwife and single mum of three, was able to ‘withdraw’ AUD $10,000 tax free in each of two separate Tax Years from her Superann, and she did so. She’s still in her forties so hopefully she’ll be able to make up some of that loss before retirement.