To think why should I fund pensions for people who have previously opted out

[Loveweekends10]

I have always worked full time at the same time as raising my kids in order that I am financially secure and that my pension will be good.
Now I must pay more contributions because of the numbers of people who only think short-term and chose to not contribute to a pension.
I know people who are not in poverty but just choose to spend the money on going out instead.

Because it's part of living in the world. As human beings living in society we help each other out.

Why should people without children pay taxes so other people's children can go to school? Why should I pay for the police when I have never needed them?

If it helps, think of your taxes going towards treating sick children. Even if you are super rich, you will quite comfortably use all of your contribution on that. Then perhaps some of the people who have opted out could fund their own pension via their partner's tax contributions. I often play this game with myself and remember all the education and children's health my sister kindly funds for us, given that she pays tax and has no children.

I understand what you're saying, but a lot of people just can't afford a pension. I know it isn't an option for us and I worry about that, but we just can't afford it.
There will always be people that can afford it but choose not to, I guess they believe that someone else will take responsibility when the time comes.

If our financial position changes, it will be one of the first things we look in to.

Loveweekends

What job do you do?

Lots of jobs have very poor pension provision with no contribution from employers. And self employed people also have no additional contribution. So automatically lose out compared to those who work in public sector or larger companies.

It is only fair that these people are protected from poverty in old age. Or would you rather they starve or freeze to death?

You could always bugger off and live in Grand Cayman or some other tax haven? Or are you not quite rich enough for that?

I thought NI was going up only for those who had contracted out (as part of terms of occupational pension). And the increase will then be to the ordinary (Class 1) rate, not something further.

Or are you talking about changes for those self-employed?

I'm cross with the (mendacious) claims made that this will improve things for women with incomplete NI records owing to child-related break from workforce. If the responsible ministers have not heard of the NI credit - which has been around since 1970s - attached to CB, then this policy is bound to be another shambles.

You pay taxes, the elected government then decides how these taxes will be spent. You are not paying to fund anyone else's pension, you are paying to be part of a democratic society.

I though it would be NI not taxes that this would effect?

Anybody know how much NI wil go up on 50-60k ?

Loveweekends - have you state educated your DCs or been state educated yourself? did you have your DCs in an NHS hospital? Have you ever also needed any NHS treatment? Have you ever claimed child benefit?

I realised recently that once I have my second DC on the NHS (currently PG), after my state education and my pre-fees degree, my various illnesses as a child etc, even though I'm in my 30s and earning over the average wage, I still have so far taken far more out of the pot than Ive put in it. (Although if you look at DH and I as a couple, then ok, we've paid more in than we've had out so far)

This is without any major physical problems or any periods of unemployment, and not getting anywhere near state pensions or the level of care often needed from the NHS as you old.

Yes, you might be paying for someone else's pension, but then someone else paid for the GP practice you go to and the teachers at your DCs school.

Trust me, if you start pricing out the costs of going private for everything, very few people's NI contributions come anywhere near touching that...

If someone is depending on the state pension alone, even if it is the new flat rate one, they are hardly going to be rolling in it. It's enough to just about get by and no more and as a society we need to make sure everyone an afford to live.

If you have been saving for a good pension then you'll be much better off than that, it won't compare.

There has been a statement that it will be NI rates that will change (not general taxation).

And that this will affect about 6m people - those who are contracted out to a lower NI rate as part of occupational pension (typically, older final-salary ones) and some self-employed.

As others have said above, its part of living in a democratic society.

However I think there is a valid point here about life choices. It's similar to the argument about people who have savings or an asset like a home, having to use those to fund their care home, while joe bloggs down the road who earned the same money over his working life chose to spend it on holidays and other things and ends up in the same care home but funded by taxes.

Of course people can't be left to starve. But equally we're heading for total meltdown in society if this kind of inequity continues, Because apart from anything else people will just play the system. U

You cannot year after year sell people the line that they should be responsible and financially independent, work hard and fund their own pension, and then move the goalposts so that if they havent done these things they'll end up with a similar standard of living. It's a recipe for disaster long term

What age are you loveweekends?

If you are in your 30s I doubt very much there will be a state pension when you are allowed to retire at goodness knows what age.

Here we go.

I understand what you're saying, but a lot of people just can't afford a pension.

I thought the OP was talking about the state pension?

SAHMs and SAHDs are going to be given the same state pension as someone who has worked for 40 years.

I don't agree with it. Being a SAHP is a lifestyle choice.

(disclaimer - people who care for ill / disabled family are already credited with NI for their pension).

I have no objection to my taxes paying for health care, education, police, roads etc.

I benefit from all of these things, society as a whole benefits but I think there should be some reward at retirement for working.

The state pension will be pretty shit though. Anyone totally relying on it (particularly if it's a lifestyle choice, such as a parent choosing to not work even long after their kids are in school or grown up) must be nuts. I think a lot of people are burying their heads in the sand if they believe a state pension will provide them with a decent standard of living

Are you talking about opting out of NI contributions? If so:

They pay less, not none. Not a lot less - about 10% instead of 12% or thereabouts.

They can only do this if they are paying into a suitable private or company pension plan. Which they will be more into than saving on NI contributions.

They still get the basic retirement pension (that they have paid towards), but not the 'topped up' bit, as they have paid into a private pension instead.

I took it that OP was talking about the way you currently accrue a state second pension based upon how much NI you pay.

With the new system, no matter how much NI you pay you will receive the same basic pension and no additional payment for the NI you've paid.

The new system also requires an increase to the NI paid in. So in effect, if you earn an average salary or more you'll have to pay considerably more in and will get less back.

I hate this government but I welcome this proposal. In a civilised society, I think it's right to make a decent provision for all of our senior citizens, regardless of what people have or haven't paid in.

I don't really get the problem with it. Those who are lucky enough to have a good occupational pension on top of the state provision will still be better off, if that makes them feel any better.

I feel fortunate that I am in a good final salary scheme. I don't resent paying a bit more each month in NI contributions if it means that everyone can have some basic expectations in their old age.

"
SAHMs and SAHDs are going to be given the same state pension as someone who has worked for 40 years."

If you take a couple of years to look after children or elderly relatives then you got home responsiblites protection. Lots of stay at home parents are only at home for a short period of their lives. Until these changes you only needed 30 years contributions to get the state pension. A stay at home parent could get up to 22 years home responsiblities protection provided that they were looking after a child under twelve.

I think the new system will be a hell of a lot simpler to adminster. There will be fewer means tested benefits (ie. less housing benefit, pension credit)

I can understand you feeling pissed of that someone who has bummed about on income support their entire life gets the same as you. However it costs the country more to not to have a flat state pension.

But Jinsei, what about those who aren't lucky enough to have a final salary, (or indeed any other occupational) pension, such as the vast majority of private sector employees?

They'll be paying more in NI for a lower pension despite doing their best to save for their old age.

You point about paying everyone a decent pension regardless of contribution is ludicrous. The whole system relies upon people seeing some benefit to saving for their old age. The last thing our utterly shafted economy needs is for people to feel absolved of responsibility for their own situation.

Maybe I've misunderstood then. The report I heard said that those who would have to pay more were the 6million public and private sector workers in final salary schemes, as they are currently able to opt out of some NI payments if their occupational pension is deemed to be a suitable alternative.

Is NI going to increase for everyone then?

Apologies Jinsei, it may be me who's misunderstood then if you've heard that it's only people whose contracted out NI is going to increase.

As I understand it, it is those who are in final salary schemes who are going to see their NI contributions rise.

Has the government considered what will happen to those who are in final salary schemes right now but who may well find themselves in career-average or other schemes in the future? Probably not!

My pension scheme is a final salary one. But in order for it to continue being a final salary scheme we have recently had to increase our contributions and accrue our salary at a lower rate. So I now pay more for my pension which will be less when I get it and now the government wants to take even more money from me. I have to admit I'm struggling to feel magnaminous about this.