Means testing State Pension

[CuriousMariette]

Do you think the time has come for this to be introduced? I don’t think the current system is sustainable as many people are living too long. I know it’s not fair and would be political suicide but Pensioner’s didn’t even suffer a 80% furlough during lockdowns. I say this from a place of having “paid in” as people say for 30 years plus already and would likely not receive a State Pension in this scenario.

The UK has one of the lowest pension rates in the developed world.

Yet we're apparently the 5th largest economy.

The money's there somewhere.

@daimbarsatemydogsbone

They won't pay it because pensioners don't pay NI Pensioners will be made to pay the levy - not as soon as it’s added to NI, but they will be charged. Check your facts.

They won't be charged anything for over another year yet, if that even happens at all. Not sure if you've noticed but it's hardly as though we have a stable Government and you can put any stock in what they claom to be their longer-term plans actually happening!

The money's there somewhere.

Not with the majority of the public though

[quote londonmummy1966]@echt - yes but only the levy - I think that they could pay a surcharge/levy equal to NIC not just the extra 1.25%. It is crazy that my DPs have six figure pension income and pay less than many struggling families.[/quote]
Also, there are 8.52 million OAPs in the UK.

The only figures for this who pay tax I could find, and by your argument should be paying NI is 37, 000 at the 45% band and 508, 000 in the 40% band.

That leaves a lot of people not paying your projected NI.

There really really aren't shitloads of OAPs rolling in cash.

I'm going to count on that money OP as I won't have quite enough otherwise. You might not need it but others will.

@monfuseds

Can't tell people to stop smoking because 'it will shorten your life', but then complain when they stop smoking and live longer.

no one mentioned smoking on this thread though or saying old people should take it up to die sooner

I know. It was me who mentioned smoking - because the anti smoking crusade is very relevant to the 'old people are living too long' narrative, and also the discussion about tax revenue.

The point is that over the past 30 years, many people have been persuaded or coerced into giving up smoking. Told to do so 'because it shortens your life'. So what happens when they give it up and don't die younger? They face a barrage of 'old people are living too long'...

The money's there somewhere

But where?

Big companies rather than small buisness or individuals.

We need better paying jobs that come with manufacturing. Currently to get a well paid job people either seem to need a degree or have a construction trade. Too many jobs are undervalued and underpaid.

I think that's a bit simplistic, our population is growing because people are living longer. That's not a reason to take up smoking though.

@monfuseds

Do people think today's 20 & 30 yrs old will receive a state pension? The way things are going I don't even see the NHS existing in its current form in the next 5 yrs.

This is what everyone said when I started work in the early 90s. But 30 years later, I can't see how they can make this change. (We also paid 25% basic tax rate back.)

@whatkatydid2013

I know people get really shirty about idea of pensioners losing out but the government just introduced an additional 1.25% for employers & employees NI to help fund health & social care. Imagine these households

Household 1 is a single pensioner who rents a council flat with state plus small private pension. Their current income is ~ £10k/year

Household 2 is a single pensioner who owns their own 4 bed detached home outright & has savings amounting to ~£150k. Their overall pension is £40k/year but net income is more like £34.5k accounting for tax.

Household three is a single parent working 25 hours/week on minimum wage. They rent a 2 bed terrace for £600/month for themselves & 2 children. Income is ~12.5k/year but net income with universal credit/pension contributions/child benefit is around £25k

Household 4 are a couple with two children who earn around £90k between them. They own a 5 bedroom terrace with a mortgage and have ~£70k of savings. Their mortgage is £1,300/month. Their net income including child benefit less private pension contributions is ~£64k/year

If you had to pick out which two of these households ought to start paying a bit more towards health and social care which ones does it seem fairest to tax more?

It isn't that simple in reality though, is it?

How about the elderly couple who own their house outright but have no private pension?

What about the renter with no assets but some private pension income?

A couple who rent and have a £50k income between them but spend 50% of their net income on rent and are struggling?

A single mother who earns £101k but therefore gets no help with childcare costs of £2.5k per month and has commuting costs and housing costs of another £2.5k per month?

How would you actually define the criteria to make it "fair". It can't be done.

Too many jobs are undervalued and underpaid.

yep & it's a vicious circle with many people themselves don't want to pay the "correct" price for goods or services.

People complain about Amazon but don't stop using them.

Why the hell should I live this kind of life flogging myself to death only to fund other people who don’t make these sacrifices?

Well don't then. Spend more time with your wife and children. Money alone can't make you happy.

I worked non stop for 45 years and am entitled to receive my pension.

As for many people are living too long you can fuck right off. Tell me that when you're in your 70s. So ignorant.

@mellicauli but in the 90s the deficit wasn't so high & birth rates were never predicted to get this low. They can make any change they like.

@monfuseds

I think we should just move NI into income tax so people don’t have this misconception it’s some sort of fund.

good point, I didn't realise so many see it as a personal pot.

Politicians don't want to do this because they would have to stop the discrimination in terms of tax in favour of business owners/ self-employed people, and then also the general population might realise how much tax they actually pay. It is all the same, so the basic tax rate is 32%. People wouldn't like to hear this, it's not a vote winner. Successive Governments of all stripes have promised to overhaul and simplify the tax system and then realised that whatever they did towards that would obviously disadvantage some people and make them angry so the project has been abandoned again and again. Every single Government makes the tax code longer and more complex, not shorter. Yet again it's political expediency winning out over good governance, logic and any kind of long-term vision.

Yes, I think a young person’s life is more important than an 89 year old’s. We can’t afford pension payments and health and social care for the elderly at projected rates without it seriously impacting what the state is able to provide for children and the young - which is where I think it should be focused.

I totally agree. And I know my children's grandparents do as well.

@Tealightsandd Oh come on! The rich are the ones paying for it all! The problem is that there are too many people taking more from the pot than they put in! Exactly how much more do you want the rich to pay? Because at a 45% tax rate (plus NI, SDLT, VAT and council tax), I certainly feel like I do my bit - and then some.

There really really aren't shitloads of OAPs rolling in cash.

"Average wealth varied most by age, with median total wealth amongst respondents aged in their early 60s almost nine times as high as those aged in their early 30s."
"Home ownership and preparations for retirement play significant roles in this divide, with median property wealth rising across all age groups and pension wealth peaking as individuals approach State Pension age."
"Today's younger generations are less likely to own their own home than their predecessorss_. This is noteworthy since living in a rented home was associated with lower wealth than mortgaged homes when controlling for age and other factors"

@whatkatydid2013

I believe some research claimed moving child benefit to being means tested would cost more in admin of more people doing tax returns, checks to ensure people hadn’t claimed when they shouldn’t have etc than it would gain. I’ve seen same on winter fuel allowance. It’s likely true for some benefits that are small & less so for those that are significant.

Yes. Subsequent studies showed doing that to child benefit did in fact cost the state more than just paying it universally. They have to process all of the additional tax returns, take enforcement action to recoup wrongful payments etc etc. That money would have been better spent on children than extra Civil Service paperwork.

[quote Fr0thandBubble]@Tealightsandd Oh come on! The rich are the ones paying for it all! The problem is that there are too many people taking more from the pot than they put in! Exactly how much more do you want the rich to pay? Because at a 45% tax rate (plus NI, SDLT, VAT and council tax), I certainly feel like I do my bit - and then some.[/quote]
Any real evidence for that?

@Fr0thandBubble the truly rich don't always pay their fair share though.

"Using anonymised data from personal tax returns, we show that in 2015-16 the average rate of tax paid by people who received one million pounds in taxable income and gains was just 35 per cent: the same as someone earning £100,000. But one in four of these paid 45 per cent – close to the top rate – whilst another quarter paid less than 30 per cent overall. One in ten paid just 11 per cent—the same as someone earning £15,000. The rich, it seems, are not all in it together."

@whatkatydid2013

If you moved NI out of been a separate charge & handled it with tax (applying the same thresholds) then the people with the smallest earnings (including pensioners on really low incomes) would see no change or a decrease in tax overall and those with largest unearned/pension incomes would see the biggest change. You could put in plans now to make changes over next 20-30 years to slowly move away from ring fenced NI to give people a chance to plan for it

It isn't ringfenced!

@monfuseds

There really really aren't shitloads of OAPs rolling in cash.

"Average wealth varied most by age, with median total wealth amongst respondents aged in their early 60s almost nine times as high as those aged in their early 30s."
"Home ownership and preparations for retirement play significant roles in this divide, with median property wealth rising across all age groups and pension wealth peaking as individuals approach State Pension age."
"Today's younger generations are less likely to own their own home than their predecessorss_. This is noteworthy since living in a rented home was associated with lower wealth than mortgaged homes when controlling for age and other factors"

That was not the question posed by londonmummy, and has nothing to do with pensions.

It has to do with wealth though