Salary sacrifice to be taxed

If you are a pensioner or close to pension age, I am curious: do you believe that your children or grandchildren will receive the state pension? How do you see it playing out?

How can any government take any kind of serious long term strategic action when the public vote based on populism?

We get the politicians we deserve. If one of the next leaders is a Farage or a Polanski with their ridiculous populist bigotries that will be the fault of the voters, nobody else.

Most of this thread includes populist swipes at “generational fairness” and “greedy pensioners living in luxury”. So long as most voters work on bigotry and stereotypes instead of checking facts politicians will have to pander to that bigotry.

The only difference which holds up to scrutiny is economic class difference, not age. A third of pensioners are in fuel poverty, the reason for the triple lock was the shameful number of pensioners living in absolute poverty, plenty of millennials are inheriting property wealth and doing very nicely (and if you calculate wealth by averaging over generations they are set to be the richest in history).

Removing the NI subsidy element of salary sacrifice for contributions over £2000 will make a minor difference to most pension pots. It certainly doesn’t remove the incentive to put money into pensions which is still tax free. Personally I would restrict the tax allowance to basic rate - its always seemed mad that I was given a bigger subsidy as a top rate earner than as a basic rate earner.

I also wish a government would bite the bullet and merge NI and basic tax but it would need to be done over a period of 10-15 years - again long term planning which our voting patterns preclude.

When May introduced the “insurance premium” model for care costs, which was a reasonable idea if imperfect, the populists started attacking the “dementia tax” which killed any attempt to fix the problem.

We also need to look at public sector pensions. PP are correct, this change really only hits private sector DC pensions so it is more of a load on the private sector. The old adage that the public sector trades pay for conditions ceased to be true 15 years or more ago. Its also nonsense to pretend public sector jobs are “harder”. There are tough and easy jobs in both sectors. The public sector has become so big that a huge percentage of costs are now going into DB pensions. That is a bigger long term issue than the basic state pension which has never been more than a minimal level and still trails most of the G7 and Europe.

Good grief, there are more intelligent pot plants than some on this thread.

Funny how nobody is complaining that Student Loan payments aren’t reduced by paying into a pension.
My DD has to pay 11% of her Teacher’s salary into her Pension, she still has to pay Student loan without that taken into consideration.

Those who are able to Sal Sac have their Student loan payments reduced.

Excuse me while I locate my tiny violin for those who might have to pay a little but more NI because they choose to artificially lower their income.

Many in public services do not have pensions equivalent or more than the average worker.

Yes, they do. Economic data shows unequivocally that they do when you look at net disposable income (don’t forget that they are not paying NI. As well as most having no housing cost).

They have worked and paid in for 40 plus years and you think they are going to take it lying down
Political suicide!

Of course they won’t “take it lying down”. These piranhas have held the country to ransom for decades which is why there has been no money for productive investment in infrastructure, education, industrial policy etc. that would actually raise productivity and, therefore, living standards. They do not care. They are quite happy to be the first generation in history that left their children and grandchildren worse off than they are.

This attitude exemplifies what I’m talking about and is precisely why the country is in the state it’s in.

Meanwhile they want to blame disabled children/ immigrants/ avocado on toast/ <insert scapegoat of the week>/ (most ironically) “welfare recipients” when they themselves are the largest welfare recipients by far and the only group in society of whom a large proportion receive state welfare of which they have absolutely no need.

How they continue to do so with a straight face I don’t know. I suppose either they must be absolutely shameless gaslighters who care about nobody but themselves, or they are so economically illiterate that they genuinely don’t understand how ridiculous these stupid comments make them look and that nobody with half a brain is buying the sob stories.

Crumbs I think you have issues @222days thats quite some hatred you are showing

They are not paying national insurance.

Ahhhh yes, always the pensioners - who retired far earlier than they paid sufficient tax to fund on average - want the pension age changed for those following behind them because it won’t affect them, but are totally against means-testing their own welfare that they are receiving right now, or abolishing the triple lock.

What a strange co-incidence.

”Keep paying me, gimme gimme gimme, just make it so that my children and grandchildren who’ve paid for this for me get nothing! That’s fair!”.

Just like they did with education, healthcare, opportunities to work/ move abroad, housing…

The most entitled generation in history and so self-righteous that they respond to any attempt to discuss economic facts with personal anecdotes and impressions of a Four Yorkshireman sketch.

Absolutely nonsense.
Many in public services do not have pensions equivalent or more than the average worker.
They have worked and paid in for 40 plus years and you think they are going to take it lying down
Political suicide!

Not that long ago 2000s those in the public sector told by those in the private that we chose those jobs so suck up the terms and pay, so we did.
Now all those bonuses have dried up you don't like it
😂

Get lazy workshy people back to work, 35% pay no tax, 18-24 year olds sitting around on benefits is ridiculous, we are creating a lost generation
Corporations raking in billions on profits -go after them

The benefit is often that employers will make higher/ matched contributions above the legal minimum if the employee makes higher voluntary contributions. This is not available when saving into an ISA. This is something that should be encouraged and the Government’s proposed policy means that the majority of employers are stating that they will cut any additional voluntary contributions in future or cut salaries further if they implement this policy.

Why should public sector workers have other taxpayers fund employer NI relief on their pension contributions, raising the employer contribution levels by 15% over what would otherwise be affordable, and private sector employees have to fund this but have their own employers prohibited from doing so even on much lower contributions?

Your father’s particular circumstances do not refute economic data across the entire population/ cohort.

Which is why it is better for care home to be funded by the residents capital not current tax payers.

given that weekly care homes fees rack up at about £1500 that will erode any inheritance very quickly. Even faster if there are medical needs such as dementia

No it needs to levy some form of NI on pension and also get public sector and broader benefits under control.

Don't raise the retirement age. People might be living longer but health and quality of life are better closer to retirement age, if a person makes it that far. Allow people to save for their retirement.

what is the point, if you don’t reduce your tax liability. Stocks and shares ISAs give you growth and you get tax free income.
i can see you are another empathetic person…
Salaries were lower then. There were very few benefits. So they were not a strain on society.
if you take my 89 year old Father, he has never had a single benefit ( apart from pension), never had a hospital stay and is on no medication.

Exactly. Indefensible, logically inconsistent, will exacerbate existing inequalities between public and private sector and across generations, quite obviously would be immensely economically damaging both now and in the future (because we desperately need everyone to be saving for their own retirements!). It’s the most clueless and damaging policy I’ve seen proposed in quite some time, completely idiotic. It will have myriad negative impacts on the economy as I set out earlier and not one positive effect, and all rationales put forward to attempt to justify it have been incoherent and untenable.

Why the moronic Chancellor is not listening to the numerous independent and robust reports published in recent years from independent economists from across the entire political spectrum (based on robust analysis of economic data that has been statistically validated) and actually taking measures to remove the perverse incentives and cliff edges in the tax system which would almost instantaneously raise productivity and growth and tax revenue is beyond me. Instead, she seems determined to exacerbate the problems! Total incompetence.

Either she is extremely thick or she’s somehow been caught in a honey trap by Russian intelligence. 😆🐝

The government will get their pound of flesh from the current generation of pensioners - be it care home fees or inheritance tax

as the saying goes - there are two things in life that are certain, tax and death

i I don’t want to go back to when my grandad was retired and pensioners were in poverty. They just need to rethink the triple lock as it’s not sustainable.

Pensions are taxable income. So retirees with state and private pensions are paying tax.

The Social contract is that people pay in over their working lives and in return there are benefits, healthcare and pensions. Any change needs to come in over time just look at the chaos created with public sector pensions moving to CARE schemes and the issue with WASPI when the state pension age increased.

Government needs to increase state pension age again if it is to bring more changes. After all we are living longer and healthier then ever (on average)

It’s pathetic, isn’t it?

And that ship has already sailed. I’m sure one of Starmer’s advisors must have made him aware of the opinion polls over the last year or so. They have zero hope of being reelected so he might as well do the right thing now and actually implement some measures that will improve productivity and growth so that people have some hope of rising living standards in the future.

At least then, in time, he might be seen more favourably when that legacy comes to fruition after they’ve left office. Instead they seem determined to continue the destruction and set fire the the ruins.

Over 50% of the welfare bill is spent on pensioners, a large proportion of whom have no requirement for it and are absolutely capable of supporting themselves. That isn’t ageism, it is an economic fact.

It’s to fund the benefits black hole which is spiralling out of control. Stop with the ageism @SomethingInTheAirToday

What utter nonsense. A large proportion of private sector employers (pretty much all who know what they’re doing because it is better for both the employee and employer) use salary sacrifice arrangements for all employee pensions.

SIPPs most certainly did exist when current retirees were working-aged. They could have set up a private pension scheme at any point if they did not have an occupational pension. They lived through the most prosperous period with the largest asset growth in recorded history so if they chose to blow all of their earnings and save nothing then that is hardly everyone else’s fault.

They need to stop disincentivising aspiration as they are killing growth

and they need to stop leaking and just figure out what they think will work and have the courage in their convictions

today a no 10 source has leaked to the DM that left wingers are bullying starmer into a mansion tax. That very much sounds to me that a mansion tax is coming in and starmer doesn’t want to lose the middle class vote so is trying to convince everyone it wasn’t his idea🙄

Again: as a cohort the current retirees are paying, on average, £200k less in tax in real terms over their lifetimes than they are extracting from the state in public services and welfare. So yes, it is too generous to pay them £1000 per month in welfare, regardless of whether they require it or not, because they have not funded this and working taxpayers can’t afford to do so.

The state pension needs to be means-tested. 25% of the people receiving it are millionaires and perfectly capable of supporting themselves. A further 25-30% have occupational pensions that provide them with a net income that exceeds the average income of a full time worker in the UK, while they have no childcare to pay, usually have no dependents, and the majority of them have no housing costs. That is completely unsustainable. Removing the state pension from these people who do not require it would save taxpayers £80-90bn per year. This saving can be made without causing any poverty for pensioners whatsoever.

This largesse - which is precisely what it is - is why public services and infrastructure is falling apart. This cohort have held the country to ransom for far too long already.

As for the triple lock, it is apparent to anybody with a basic grasp of mathematics at the level of a primary school child that it has to stop because if it continues indefinitely it is a mathematical certainty that eventually pension payments would be larger not just than 100% of all tax revenue but the entirety of GDP! It was never intended to be permanent, and nor can it be. This is a simple mathematical fact.

So “DFO” yourself.

Charging them more would be unfair. Unlike young people they down have an opportunity to increase their income. Even if they sell their home they will still need somewhere to live, and if they need to move in to a care home the government benefits from them being able to pay for the care for all or part of their stay.

Just like the employer NI tax raid from last year netted me a 1 percent pay rise this year…well, at least my employer at 3 percent contribution can’t go lower on my pension - but they can and are once again looking to reduce headcount…

If they are going to do this it must be applied to all schemes so they’ll have to be letting all public sector workers know that their pension payments will be reduced by 15% because the taxpayer isn’t funding NI relief on their employers’ contributions anymore, either. Otherwise, I think there would be very good grounds for taxpayers with DC schemes taking the Government to court.

I’m going to write to my MP and make all of these points and suggest others do the same. This is one of the most idiotic and economically damaging policies I’ve seen proposed, especially having clobbered private sector employers with more national insurance last year already! And clearly they’ve learned nothing at all from the effect that has had on the economy, being one of the main reasons why there is now another shortfall in tax revenue. It really is astonishing.

And will be passed on to employees via lowered employer contributions and lower overall salaries. The employer surveys on the policy have been crystal clear about this.