SIPP

[Hawkey99]

Not a RM pension question but a general pension question.

My wife has a SIPP and for every £1 she contributes in the government add 20% in approx 2 months.

For anyone with a SIPP it seems a fantastic way to save.

I understand that when you take the money out you only get 25% tax free and then pay tax at your appropriate rate.

However for my wife, this will be her only income for quite a few years so she doesn't expect to pay any tax when she draws down her money.

My question is why does the government contribute so much to pensions. Whats in it for them.

Many thanks

[jetblack]

They don't contribute to your pension as such - they have diiferent tax rules on income. I'm not giving you anything if I choose not to (forcibly) take from you.

Whats in it for them ? 1) reduced burden on the state 2) the well off benefit way more from tax benefits of pension contributions than the likes of you, I and your wife. And its to them that the Govt., generally speaking, is subservient. They are the wealth creators etc etc

[Hawkey99]

Hi Jetblack,

I don't understand your comment "they don't contribute to your pension as such".

My understanding is that they do directly contribute.

Thanks

[jetblack]

They give you tax back that you've already paid on your income. Its a refund of your own money.

The Govt doesn't have any money of its own (except if you include the money they magic into existence via QE) - its all ours, gleaned via general taxation.

[heapsy]

The top and bottom of it is this, if nobody had a pension, the whole system would grind to a halt, as when you retire, you would have little or no money and so wouldn't spend anything. think of it as the chicken and egg scenario.

[lordthornber]

As others have said, it is to reduce the burden on the state.