Solving the social care crisis
Regarding the news that the prime minister wishes to fix the social care crisis (July 25): This is ironic.
Frankly, while the money matters, the simple truth is that just as in the NHS, we need workers to do the ‘social caring’, and historically, most of these have come from abroad, largely eastern Europe.
Mr Johnson and his cronies want to ‘take back control of our borders’ and stop migrant workers coming to the UK to do these low paid jobs.
Even more bizarrely, the old folk who voted Brexit are the ones who are going to be most in need soonest.
Be careful what you wish for.
Dr Tim Kimber
GP in West Sussex
Meddling with pensions
The fact that the impact of the NHS Pension Scheme, and indeed other similar state sponsored pension schemes, are causing such concern is due both to their generosity and to their complexity.
Having studied the NHS scheme I think I understand the problem. That is, the calculation of the lifetime allowance.
For owners of small businesses and the self-employed this is simple enough.
The lifetime allowance is £1,055,000 in 2019-20. So, you must not contribute more than the amount that would add up to that over your working life, and no more than £40,000 in any tax year.
But in the defined benefit schemes enjoyed by NHS employees, the lifetime allowance is not just an aggregate of contributions: It has to be calculated based on a formula that creates a theoretical lifetime allowance and then relates that back to the cap on contributions.
Given the generosity of the NHS scheme where contributions of 20.6 per cent of salary of are made by the employer (taxpayer) and only 14.5 per cent made by the highest earners (£111,376 and over) and applies a multiplier of 16x to calculate the theoretical lifetime cap, it is not hard to see why this is causing the top earners to breach the limits.
Additional complexity is added by the fact that the pension is index linked, so the formula is leveraged by future inflation.
So, it is not surprising that the medics are utterly confused and upset when they receive a big tax bill, because of the byzantine complexity of the calculation over which they have no control since it is applied mechanically.
While doctors are highly skilled, they are not actuaries.
As owner of a small business, I have a certain sense of schadenfreude.
I have to make all my pension contributions myself, albeit with tax relief, without the additional benefit of the kind taxpayer chipping in an extra 20.6 per cent. Also, I cannot make contributions out of dividends.
Prudent owners of small businesses do not pay themselves high salaries, but rather good dividends in good years and none in bad; and recent tax changes have reduced the attractions of those too.
Therefore, I have some envious thoughts about doctors who can decide to earn less by working less, which must be a by-product of being pretty well paid anyway, or retiring early, which sounds nice.
But I wish doctors no ill.
They do an important job in keeping us healthy, earning our living and paying our taxes.
But there is no reason that they should receive special treatment.
So, the solution is not to fiddle with the NHS scheme and other civil servants’ schemes, but to reform the whole muddled pension system.
Mark St Giles
Cadogan Financial
Hypocritical FCA
Regarding the news that the leader of the independent investigation into the Financial Conduct Authority’s handling of a collapsed mini-bond provider will not be able to force the regulator’s employees to meet with her (July 25): The FCA expects those it regulates to cooperate with any enquiries it makes. A similar expectation should apply to any investigation of its own actions.
If this is not the case then it really does mean that the FCA is hypocritical and unaccountable.
Alan Kendrick
Oakwood Financial Services
Fraudulent emails
Regarding the story about scam emails, claiming to be from the FCA recommending investing in cryptoassets (July 22): If anyone believes this, then they should not be a financial adviser.
Karen Malin
The GI Consultant
Cash cow
This industry, more than any other, is seen as an ongoing cash cow for whatever new idea or adjustment the government, Treasury, FCA, Financial Ombudsman Service or Financial Services Compensation Scheme chooses to foist on us.
As usual, it is easy to spend or steal other people’s money and it only becomes a crime when it is not a public body doing it.
In any balanced world you would have FCA funding balanced between a mix of authorisation fees and fines.
Only in the bizarre yet real world of financial services does the adviser become disenfranchised.
Alan Lakey
Highclere Financial Services
ID update needed
Surely it is time that all providers, platforms and trustees adopt better ways to do ID verification.
It is far more secure to use portals, accept photos and copies of ID and then do online ID verification than cause all this waste of time. We should all be pushing them to do better, along with our industry press.
In terms of trustees – which are same problem – they have been asked by the Pensions Administration Standards Association to look at electronic ID verification methods. Let’s hope they do.
Let’s hope all of them use the technology available to them to stop this time-wasting – I do not think they realise how anxious it makes their clients/members.
Jane Hodges
Money Honey
