To feel mean thinking it's reasonable for the pension triple lock to be broken?

[BendyTrendy]

Tricky one because our state pensions are lower than the rest of the EU, but also the largest area of welfare spending (at about 42% of the welfare budget).

Still, on balance, I think it's reasonable to break the triple lock under the circumstances of both Brexit and Covid recovery.

Can the country justify an 8% rise to the state pension under the circumstances? Is the triple lock on pensions sustainable? I feel mean even asking the questions, but tough choices must be made.

Boris Johnson signals 'triple lock' on pensions could be broken amid estimates of 8% rise

State pension predicted to rise by 8%

Rishi Sunak hints at suspension to pension triple lock

Tough one.

@vivainsomnia

If we can means test child benefit, we can means test other state benefits And then what? Everyone stops investing in anything because they are guaranteed to lose it all anyway.

Let's see. Work the minimum hours that guarantees you get topped up by benefits. Don't pay into a private pension because if you do, you'll get nothing more, and you'll end up probably getting almost as much from the state pension anyway.

Who in their right mind is going to go work longer hours, reduce their monthly disposable income just so that money can go to support those who don't? There has to be an incentive to invest so that there is some money to share. Encouraging people to be receiver than giver wil end up with nothing to be shared anyway.

Tax relief on paying into pensions and the 25% tax free lump sum are pretty big incentives, as is not having to pay NIC on occupational pensions.

@vivainsomnia

Low and ‘normal’ earners are out there paying rent, buying food from supermarkets and other shops and contributing to the economy And taking more than they are paying in. Do you think they pay more in tax from buying food than they take in tax credits, CB, HB?

@vivainsomnia

Very few people are net contributors anyway. I’m just saying everyone is doing their part.
Interesting comment about benefits too. I never commented on that. There are hoards of people who are not eligible for benefits but clearly not wealthy.
One may be a net contributor but have 5 children? A young single person with no dependents who has never claimed any benefits and has few health needs, probably accesses far fewer public services.

And if anyone wonders, I've been self-employed for over 30 years, as well as paye employments during and previously.

It's just the way life has turned out, I've paid my bills and met all of the responsibilities that life has thrown; the only thing I haven't done is get a job with great pension contributions or earn enough to pay into a private one. But I've got 40+ years of State contributions.

No axe to grind from my end, just thinking of ways that I can keep doing the same when I'm 67.

@vivainsomnia

If we can means test child benefit, we can means test other state benefits And then what? Everyone stops investing in anything because they are guaranteed to lose it all anyway.

Let's see. Work the minimum hours that guarantees you get topped up by benefits. Don't pay into a private pension because if you do, you'll get nothing more, and you'll end up probably getting almost as much from the state pension anyway.

Who in their right mind is going to go work longer hours, reduce their monthly disposable income just so that money can go to support those who don't? There has to be an incentive to invest so that there is some money to share. Encouraging people to be receiver than giver wil end up with nothing to be shared anyway.

I don’t know anyone who follows such warped logic. For example, most people realise their assets will be counted if they need social care later in life. They don’t just sell up their nice house and leave the job they enjoy. I pay into a private pension because I want to, I could opt out. Why would I? I want to try to be as secure as possible in old age.

State pension IS taxable if - in addition to other income - your total income goes above the personal Tax allowance (£12750 in 21/22).

www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/how-is-my-state-pension-taxed#:~:text=State%20Pension%20income%20is%20taxable,ve%20reached%20State%20Pension%20age.

I also think that the older generation have not been that affected by the pandemic

Other than contributing most of the deaths, that is.

I think the triple lock needs to go but let's not pretend pensioners have been having a lovely, relaxing time over the last 28 months.

@Porcupineintherough

I also think that the older generation have not been that affected by the pandemic

Other than contributing most of the deaths, that is.

I think the triple lock needs to go but let's not pretend pensioners have been having a lovely, relaxing time over the last 28 months.

And being locked in their houses, many of them entirely alone, for well over a year.

Vicky exactly.

I meant 18 months, of course.

[quote VickyEadieofThigh]State pension IS taxable if - in addition to other income - your total income goes above the personal Tax allowance (£12750 in 21/22).

www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/how-is-my-state-pension-taxed#:~:text=State%20Pension%20income%20is%20taxable,ve%20reached%20State%20Pension%20age.[/quote]
Although state pension forms part of your taxable earnings AIUI there's no mechanism to actually collect tax from your state pension. So if you have a private pension or other source of income it's deducted at source from that or through self-assessment.

I am a pensioner and think that an 8% rise is unreasonable with the cut in Universal Benefit and the fact that the pandemic has cost so much. However, remember that only a few pensioners get the new rate. Most pensioners get around £40 per week less. Many younger people on benefits get a similar amount if they get PIP.
Last year my small private pension went up 0.5% which is much less than my increased costs and the average salary increase. Many pensioners get just over the amount to get pension credit so would not be helped if this was increased instead of all pensions. They should stop increases for pensioners paying higher rate tax.
I did not vote for this Government or for Brexit. We need to increase taxes instead of arguing of which group of lower income people should be hit, but it won't happen with this Government.

@CayrolBaaaskin

Also what your dhs pension is ohh is irrelevant! It’s a benefit not a job!

The point is it's not enough to live on. It's not a benefit, precisely because it's contribution based. He has been a taxpayer for 48 years. I will be the same surely that's enough?

Pension is not a benefit, It should not be included in the welfare budget (is it?). Most pensioners have been paying in all their working lives only for govt. to plunder the pot. 8% of not very much is still not much. Not all pensioners own their own homes, have private pensions etc. and many are too proud to apply for top-ups.

My late grandad spoke out against poverty and inequality. He spent his retirement working with vulnerable pensioners in the days of bad pensioner poverty for some. He had an occupational pension and was comfortable but not wealthy. He was also a great believer in self help and favoured people working where they could. Basically from each according to his (maybe their is more appropriate now) to each according to his need. Having grown up pre welfare state, NHS etc he valued these things immensely and believed we should all both protect and benefit from them. My point is it's not a race to the bottom. I don't know what the solution is but things have gone wrong.

@Alleycat1

Pension is not a benefit, It should not be included in the welfare budget (is it?). Most pensioners have been paying in all their working lives only for govt. to plunder the pot. 8% of not very much is still not much. Not all pensioners own their own homes, have private pensions etc. and many are too proud to apply for top-ups.

In statute/legislation , It IS a benefit.

Does it matter if the State Pension is regarded as a Benefit or not? Identifying the State Pension as a Benefit, when it is also contribution-based, only helps to discourage those of a later age that culturally equate the word 'benefit' with a sense of 'shame'.

This cultural/generational sense of equating benefits with 'shame' is an ever reducing viewpoint, the majority now having no 'shame' grasping what ever they can get - be it child benefit or Fuel Allowance.

Another thread from the government, I see!

For all those knocking the tories for considering not applying the triple lock this year. It was the tories, well the coalition, who brought in the triple lock following the outrage when the previous labour administration gave pensioners a minuscule, insulting increase of just 25p one year. I think that this year, the triple lock should be suspended, as the high increase in average wage is artificial, due to the fluctuations caused by furlough. But the triple lock should stay in place for future years, or develop a system for calculating increases based on an inflation figure that reflects a pensioners outgoings. For example, my council tax is over 25% of a single state pension, my power bills around 13%. The pension increase we received last year was more than wiped out by the increases in these two bills alone, nevermind food inflation. We have 2 pensions coming in, but a single pensioner on just the state pension must find it difficult. If you are fortunate to have additional income you do get taxed on it the same as anyone else.

@Lincslady53

Lol That was an outlier, overall pensions, taking into account inflation, rose more under Lab than the Tories - £81 vs £75 per year in real terms.

and who has used council tax rises to hide cuts in local government funding... yep you guessed it! the Tories!

CT rises are a scandal.

If you are fortunate to have additional income you do get taxed on it the same as anyone else.

But no NI.

I don't think there's any justification for having taxes which only apply to people of working age. I think employee's NI should be abolished, and the income tax rates adjusted to make up the difference. No matter what age you are, if your income is high enough to pay tax, you pay it at the appropriate rate, and if you don't, you don't.

NI contribution years could easily be calculated by looking at income tax records and setting an appropriate threshold.

I'd keep employer's NI though.

I don't think the triple lock should be abolished though - it should not be a race to the bottom.

We need to look at how to raise more taxes, not keep on cutting services and welfare until society starts to fall apart. We need to stop accepting that charities (e.g. food banks) routinely provide services which should be funded by the state.

As Clement Atlee said: “Charity is a cold grey loveless thing. If a rich man wants to help the poor, he should pay his taxes gladly, not dole out money at a whim.”

A means tested pension sounds more reasonable.

Take away the entitlement from those who don’t need the state benefit and there’s more to go around to those who do need it.

No doubt that would hit people like DH and I. I'm 46, he's 66 and has a state pension and I'm working full time so I presume his state pension would be reduced. My job is reasonably well paid but we'd struggle if his pension was reduced as he's now winding down his business to allow him to retire properly.

[quote BendyTrendy]@WhoNeedsaManOfTheWorld I agree they’re low, which is why it’s tricky. The problem is that we can’t afford a triple lock under the circumstances. Can we?[/quote]
Of course we can afford it.

Austerity and all this bollocks about borrowing is just patronising rhetoric to explain why the small number of very rich people must always get richer at everyone else's expense including pensioners.

@BeenAsFarAsMercyAndGrand

If you are fortunate to have additional income you do get taxed on it the same as anyone else.

But no NI.

I don't think there's any justification for having taxes which only apply to people of working age. I think employee's NI should be abolished, and the income tax rates adjusted to make up the difference. No matter what age you are, if your income is high enough to pay tax, you pay it at the appropriate rate, and if you don't, you don't.

NI contribution years could easily be calculated by looking at income tax records and setting an appropriate threshold.

I'd keep employer's NI though.

You are utterly correct - having NI as a separate tax is stupidly complex.

It will never happen though as no party will upset HMRC (who would need fewer employees) or the electorate (who would see the actual tax rates they are paying).

A means tested pension sounds more reasonable

Surely that just punishes those that worked hard and saved/bought assets.

Much better to link to contributions, would encourage people to work more when they can to ensure a better retirement.

For example, most people realise their assets will be counted if they need social care later in life. They don’t just sell up their nice house and leave the job they enjoy
But in your example, it's not a given that people will end up having to sell their house to pay for social care, not even given that they will need social care. Even so though, many to opt to gift the house to their kids hoping not to require care for 7 years, so people do take it into consideration.The state pension is a given though as much as state pension in on the cards, so totally different.

It also comes down to how much they will be due to receive with their occupational pension. Those due to get a very good pension will probably just accept it, its those whose occupational pension will be hardly better than the state pension who will think 'why bother paying 100s every month if ultimately, I'll end up not much better enjoying that money each month and getting the full state pension in the end due to low income'.