It appeared that you were using the fact the NI is not currently paid on salary sacrifice or employer contributions to defined benefit pension schemes OR at the point where the pension income is received as an arguments to attempt to suggest that Reeves’ proposed policy is justified or reasonable.
It is not, because:
a) Levying NI on contributions rather than withdrawals/ pension income would yet again hit the younger generation, rather than pensioners, exacerbating generational wealth inequality;
b) Pensioners have paid nowhere near enough tax during their lifetimes as a cohort (a shortfall of £200k per person in real terms) to fund the services and welfare they have extracted from the state. By contrast, if we compare Millenials to the Boomers, Millenials are projected to pay on average £300k more in tax per person in real-terms than they receive in welfare and state services over their lifetimes, and this is before factoring in any further tax rises on those of working age;
c) Reeves’ proposal would lead to even more unfairness between (largely public sector) defined benefit schemes - which are already far more generous - and (largely private sector) defined contribution schemes. As well as DC schemes pushing all risk onto the individual the employer contributions are far lower. To then apply NI to those but NOT to the employer contributions to DB schemes would be completely unacceptable and create yet another distortion in the tax system leading to perverse incentives;
d) state pensions will not continue in their current form because this us mathematically impossible. Changes must be made to this now otherwise, again, it will further exacerbate generational unfairness (with those of working age being further impoverished to fund this unaffordable largesse to current pensioners, and then receiving no such provision themselves). This is always what the current pensioners try to argue for: “impoverish our descendents more but we should still get every advantage, you can’t change it for us”. It’s gone too far now and needs to stop. Therefore, incentivising saving (and generous employer contributions to personal pension savings above the legal minimum) is essential. This policy would achieve the precise opposite;
e) instead, the appropriate solution to resolve this issue of NI not being levied on pension contributions or withdrawals currently for either DB schemes and salary sacrifice DC schemes is quite clearly to levy NI on withdrawals/ pension income with immediate effect, for all pensioners regardless of their type of pension scheme. This will mean that income is taxed in the same way for everyone and current pensioners don’t get to have all of their contributions AND withdrawals free of NI while this is removed from those following them (but only in the private sector, of course!!) and there would be no (further, and even more unfair) discrepancy created between DC and DB schemes. It would also keep the underlying foundational and essential principles of the pension system in tact - which have been substantially undermined already by repeatedly attempts to raid pension savings by successive Governments, damaging trust in the system when the UK really needs people to save and provide for themselves - i.e. the principle that all contributions should be free of NI and income tax for everyone (FWIW I don’t think those in DB schemes should be paying NI on their “notional” employee contributions either, as many schemes have forced them to do in recent years - there should be parity): both employer and employee contributions should be completely tax free for all schemes and taxes should be levied upon withdrawal (the opposite and mirror image of the ISA system). This is simple for people to understand and is fair to all;
f) and as I noted in an earlier post, if implemented Reeves’ policy would cause huge economic problems both now and in the future because it will reduce pension savings; lead to yet more people in skills shortage areas cutting their working hours, retiring early or emigrating; increase the need for immigration (which the public don’t seem keen on); reduce business investment; lower productivity and obliterate any chance of growth: suppress any prospect of rising salaries or productivity or a recovery in the employment market; and discourage saving which would escalate the time bomb already created by the failure to reform the state pension and public sector ponzi schemes and put in place mandatory auto-enrollement at appropriate contribution levels for everyone (including the self-employed) over the last few decades.
Apologies if you were NOT trying to defend her policy. You comment seemed to me to be implying that because NI is not currently levelled on employer contributions to DB schemes or salary sacrifice DC schemes, or on pensioners’ income, therefore it would be acceptable and reasonable for NI be applied to employer contributions (but apparently per Reeves only to DC schemes in the private sector, of course), whereas the appropriate solution is clearly that the exemption from NI on pensioners’ income is removed and all contributions to pensions must be tax free.
This will not only raise far more in tax in real terms over both the long and short term (because the money grows tax free while in the pension scheme therefore there is far more to tax when it becomes taxable during retirement) but it is also necessary and fair that the current pensioners are the ones who make the additional contribution right now given their private pension incomes have not had any NI levelled on them, they are the wealthiest age cohort in society in terms of capital but also income (unheard of at any point in history previously, a direct result if their decimation of the state like a pack of piranhas), they are by far the highest users of state services (consuming almost 50% of public spending, the like of which they never provided to their own parents and grandparents even though there were far fewer of them proportionately to the population), and also because taxing existing pensioners more would have very minimal impact whatsoever on the economy whereas levying further taxes on working aged people or businesses will unequivocally mean that the economic doom loop continues, the UK’s fiscal position deteriorates further and everyone’s living standards continue to go down.
In short: it’s one of the most stupid and economically illiterate ideas I’ve heard her float, and that’s quite an achievement.