to hope the government has the guts to tax WEALTHY pensioners more

[ReallyTired]

The Fabian society has suggested that wealthy pensioners pay more tax.

www.bbc.co.uk/news/education-22220345

Some how I can't see a conservative wanting to tax wealthy pensioners more when they all vote Tory.

I find it unfair that pensioners with an income more the average family's income get free bus buses, winter fuel allowance, TV licence as well as paying less tax and national insurance. It is about time that the the wealthy pensioners took their share of the pain of the cuts.

I am in favour of well off pensioners having free bus passes, winter fuel allowance as these things encourage independence and improve health. I would like to see the money for these things clawed back by WEALTHY pensioners paying more income tax.

[Salbertina]

Agree, but they vote in disproportionately large numbers so wd take a v brave government to address this properly and equitably.

[SweetestThing]

Just to add to the mix, pensioners living abroad are entitled to the WFA, even if the climate where they live means the temperature never gets to the level of the UK, where the WFA would kick in. I guess it must be nice to live in warm, sunny Spain but get money when the UK is shivering. I also guess it must be more expensive to remove such pensioners from the system as I expect their home address on the system would remain a UK based one, so excluding on the basis of address wouldn't work.

[jacks365]

If the wfa was a voucher what difference would it make? For most households it will be £200 i don't know anyone who spends less than that a year on electric/gas/oil or whatever they use so if they got a voucher it would just mean that those on pre payment meters would have an additional process to go through actually increasing costs but for those you mentioned would just free up money from their budget to spend instead so changes nothing.

With regards to NI payments they are only payable on earnings so you don't pay ni on savings etc, pensions are not earnings so wouldn't be liable for ni even if pensioners paid

[kilmuir]

A lot of people are in trouble financially now as they have spent more than they have. Greed and unwarranted expectations.
My parents never got in debt, Dad had 2 jobs. and yes one was not well paid or in his usual line of work. Did it rather than expecting government to dish out handouts

[LondonMan]

I agree that any two people on the same income should usually be taxed at the same rate. Pension income falling in the basic rate band is taxed at half the rate of employment income, because no National Insurance is due.

What needs to happen is

1. National Insurance abolished.
   
2. What was employers NI replaced by "employer income tax contribution" at the same rate. It would be an employer part-payment of the employee tax bill, and as such would be a taxable benefit, meaning your taxable salary would increase by 13.8%.
   
3. The income tax rate increased so the government still gets the same amount of money overall, this means the basic rate of income tax would be in the region of 40% instead of 20%.
   
4. Over a period of time, say 14 years, the employer contribution gets phased out, so that eventually contractual salary and taxable salary are the same thing. (This is to make the system simpler and more understandable, the tax raised can stay the same by adjust the employee income tax rate.)
   
5. Initially pensioners should stay at the current low rate, but the rate should be raised by 1% a year for 20 years until they are taxed at the same rate as people of working age.
   

It would be unfair to suddenly double the taxes on pensioners.

[NomenOmen]

The trouble is that younger people (say up to about the age of 45) are beginning to realise that, although they are likely to work much longer than today's pensioners (I anticipate that within my lifetime [I'm 34] the retirement age will be raised to somewhere in the 70s), they will receive considerably less in retirement, and possibly nothing at all. It seems likely to me that I will not receive a state pension (since I have a private one: I anticipate future governments being forced to remove entitlement to a state pension from those who have made their own arrangements [they will only achieve this by making the state pension an unattractive option). It is basically unaffordable for countries to provide for the retirement of growing, and long-lived, retired populations at the levels at which they currently do, unless we pay much, much, much more in tax/NI during our lifetimes. The maths just don't work.

This sense of generational crisis and struggle will only end when all are in the same sad boat. This will take about 20 years (as it will be electoral suicide for any government to rescind benefits to current pensioners; future pensioners are fair game, though, I imagine).

[niceguy2]

Agree, but they vote in disproportionately large numbers so wd take a v brave government to address this properly and equitably.

Exactly. And a large proportion of them vote Tory too! Plus they are also one of the few groups of voters who have lots of time to protest directly to their MP and make their voices heard.

But in general I do agree that benefits for pensioners need review. How can you justify introducing the cap on Child benefit for higher rate tax payers yet still have free WFA for all regardless of income. How can you justify the housing benefit cap whilst exempting pensioners where probably the biggest under occupancy occurs.

[RichManPoorManBeggarmanThief]

They don't pay national insurance because NI isn't charged on investment income, and assuming they're pensioners, they don't have any earned income, so you'd have to say that NI was payable on all investment income.

The property tax might work, as it would force a lot of older people out of their homes if they are asset rich/ (relatively) cash poor, so it would free up the larger houses for families.

[NomenOmen]

Sorry: I didn't answer your AIBU...

Effectively, yes, YABU to expect any government dramatically to contradict the expectations of those who make up the bulk of their vote.

[HeadFairy]

I'm not sure tax rates for pensioners should increase as I think that might harm those on lower incomes but I definitely think that only those on lower incomes should receive winter fuel allowance, free bus passes and TV licence and all the other non means tested benefits. I think the arguments for keeping WFA as non means tested (ie if you means test it, the most vulnerable will in all likelihood lose it) also applied to child benefit, but apparently that wasn't what the government felt.

My parents are both retired, both have huge pensions (my mum has been retired for about 4 years and has so much money still she hasn't actually had to touch her pension yet). They have three (mortgage free) homes, one in Surrey, one in the south of France and one in Spain. They also have a time share in the Caribbean and five cars. That they get all the same benefits as someone living in a tiny cold house beggars belief.

Of course, my real belief is that none of these cuts would be necessary if the goverment went after the very wealthy first. Clamp down on people buy property though offshore companies to avoid Stamp Duty, close every tax loop hole possible. Clamp down massively on Corporation Tax avoidance.

[niceguy2]

Of course, my real belief is that none of these cuts would be necessary if the goverment went after the very wealthy first.

You are entitled to believe that. But you are wrong.

[NomenOmen]

niceguy - I think successive governments will phase in the measures you suggest, that is, it will become a condition for anyone in receipt of housing benefit that they cannot 'under-occupy' without penalty. As I said, it will apply first to the non-retired population, and will be carried over into their retirements. No one will therefore have the expectations that current pensioners have.

The WFA will probably be absorbed into some other benefit, and then phased out.

[HeadFairy]

why am I wrong Niceguy ?

BTW I never think any opinion is wrong, they are opinions not facts.

[jacks365]

Niceguy 2 its cheaper to give the wfa to everyone than to bring in means testing. Wealthy pensioners do not qualify for housing benefit so only poor ones would be affected by changing that. Basically it sounds like someone thought hey these people have disposable income how can we get it?

I'm making sacrifices now so i can enjoy my retirement later but if the government is just going to take it off me why should i?

[HeadFairy]

its cheaper to give the wfa to everyone than to bring in means testing

Does the same not apply to child benefit?

[ihategeorgeosborne]

I agree niceguy with regards to the child benefit and housing benefit caps. Not sure how they justify that and still exempt pensioners from all cuts. It has to be due to votes. Although I think they may have mis-judged the views of many pensioners in any case, as my father has voted conservative all his life and says he won't again. He is 80. I think that while many wealthier pensioners are not feeling the hit themselves, they are noticing the effects it's having on their children / grand children.

[ihategeorgeosborne]

Yes, that's the argument I don't understand either headfairy. They say it's fair to remove child benefit from higher rate tax payers, but too costly to do the same for pensioner benefits

[undercoversahm]

YANBU

..at least stop giving pensioners tax breaks that the working population do not enjoy (eg a higher personal allowance). Yes, most have paid tax and NI all their lives but actually nowhere near the amount needed to pay for their retirement at state expense -nobody foresaw the increase in life expectancy...the amount they paid supported the (many fewer) pensioners alive when they (the current pensioners) were working and those pensioners (the old ones, now dead) did not live anywhere near as long and so were much cheaper to support.

Public sector pensions should also be cut for the same reason - nobody anticipated they would be worth so much and they could easily bankrupt the country at current levels. They have not been paid for (no matter how much it is true that the workers paid in perhaps all their lives - it was not enough to pay for the pension they now expect).

Also, why are pensioners not subject to the benefits cap or the bedroom tax? What possible reason is there for pensioners to be subsidised to live in family sized homes when there are families in bed and breakfast accommodation? Many people in the private sector have to downsize when they retire, why should those being subsidised by the state be exempt from the realities of life? (BTW I would love for the country to be rich enough for everyone to stay in their family home for life, but it's not).

Lastly: yes, lots of their money might ultimately be spent on care homes - but isn't that why we all save up - in case we need it one day? Does anyone really believe they can have large savings that they will never spend (eg a house they will never again live in) and then think it fair to ask the taxpayer to fund their retirement home in order to preserve the inheritance for their children to inherit (who have not worked for it themselves). Support yourself first with your own money and only then ask for pay outs from the state as a safety net.

[jacks365]

Which is why they had to scrap the original policy and rethink it so instead child benefit can be claimed by everyone but its clawed back via the tax system which is not quite the same, they could operate the same system for wfa.

[Salbertina]

We're all in violent agreement! Should we start one of those online petition thingies? Or waste of time- as we've said, pensioners votes too powerful for gov to take action to their detriment.

[niceguy2]

Exactly headfairy. If the argument holds water for CB then surely it holds water for HB cap. In fact it'd be cheaper I'd think to test for the cap since the test is much easier to establish than income which can be vary for many reasons.

As for why your opinion about no cuts being needed is wrong, the answer is long and quite boring. Firstly any massive attempts to force the very group whom are already paying most of the taxes would backfire. It would force many to emigrate, increase tax avoidance and discourage spending & investment. Secondly and quite crucially the rich don't have enough money. That's right. They don't. I could go on about it but would rather draw your attention to this article which I think does a good summary (Link)

[ihategeorgeosborne]

It depends what you class as rich though niceguy. I don't think that a single income family on 50k is rich, but this government clearly does as they are no longer receiving CB and the rate at which they pay higher rate tax now kicks in earlier. I do however think that the same family on 150k a year are rich. The government has, however, seen fit to give them a nice fat tax break. I don't get it

[flatpackhamster]

ihategeorgeosborne

It depends what you class as rich though niceguy. I don't think that a single income family on 50k is rich, but this government clearly does as they are no longer receiving CB and the rate at which they pay higher rate tax now kicks in earlier.^

A single income of £50k puts that earner in the top 10% by income in the UK. By any metric that makes them 'rich'.

[ihategeorgeosborne]

Not when you take into account the number of dependants that that money has to look after. It actually puts you in about the 5th decile income group according to the IFS.

[ihategeorgeosborne]

Sorry, that was to flatpack