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.

@Blossomtoes

" And if you’re paying 35% tax and NI at 9% on your earnings. It may be inconvenient for you but that was the reality."

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So the UK average full time salary in 2021 is £31k. On this you would pay a top rate tax of 20% plus 9% graduate loan tax plus NI of 13.2% from April.

This totals 42.2 % for an average salary which is comparable to the 44% you quote for the 1970s(35% income tax plus 9% NI.

Yes the key difference is the addition of the 9% graduate loan tax and that is because university education was not only free in the 1970s but you actually got a grant of free money to go to university.

It isn't easy to compare, for example my then husband and I were saving like mad to get a deposit in 1970/71 for the mortgage we could get we could afford a nice 3 bed semi (£5k where we lived) but we didn't have the deposit. We bought a house in 1973, our money now bought us a rundown 2 bed terrace, it needed rewiring, new windows as the frames were rotten and new floorboards as they were rotten as well. There was no central heating. So we bought a £5,200 house, someone else could have bought the nice 3 bed semi for £5,000 18 months before us. They had a much easier time than we did.

Just to give a flavour of the value of money then my husband couldn't get the mortgage on his salary, 3 times was usual then, but with my earnings we just managed it. They didn't look at affordability then just income which was just as well as what I earned was wiped out by childcare.

Fast forward 2 years, house prices had slumped a few months after we bought the house, we spent alot of money on it and alot of blood sweat and tears and we sold it for £7k, if we had added up what we spent on it we probably made a loss. We were sensible enough not to do that.

The next house we bought was £9k, it crippled us and there were months when we didn't know if we would be able to buy food but in the long run we made money on it. Ten years later we got 4 times what we paid for it.

You could do the same thing now, people who bought a house 18 months ago have made money, people buying now might be at the top of the market and losing money in six months time.

So if you compare us buying a house at the top of the market in 73 with someone buying a house 18 months ago it would give a different result to us buying our second house when prices had dropped to someone buying now with prices high.

Go back to the banking crisis, about 14 years ago, people who bought just before the crisis were in negative equity for years in many cases, the people who bought after the crisis probably got a bargain.

It really isn't as easy as pick "the 70s" v "the 20s" because there are big variation within those time frames.

Yes the key difference is the addition of the 9% graduate loan tax and that is because university education was not only free in the 1970s but you actually got a grant of free money to go to university.

Only if you were one of the most academic 5%.

[quote 1dayatatime]@Blossomtoes

" And if you’re paying 35% tax and NI at 9% on your earnings. It may be inconvenient for you but that was the reality."

++++

So the UK average full time salary in 2021 is £31k. On this you would pay a top rate tax of 20% plus 9% graduate loan tax plus NI of 13.2% from April.

This totals 42.2 % for an average salary which is comparable to the 44% you quote for the 1970s(35% income tax plus 9% NI.

Yes the key difference is the addition of the 9% graduate loan tax and that is because university education was not only free in the 1970s but you actually got a grant of free money to go to university.[/quote]
Not everyone is paying student loans back, lots didn't go to uni and lots went before tuition fees or when they were low and are still paying mortgages now. Or are you saying people in their 30s who paid lower tuition fees are at a great advantage now?

You do realise that you don't pay tax and NI on your total earnings so you need to check how the starting points have changed for them. You don't pay 9% of your income for your student loan, only once it goes above a certain level.

Again picking the bits that fit the story will paint a certain picture.

Do you know how many, or should I say how few, went to uni in the 70s?

I literally said it’s never been easy.

I didn't say that either though did I?

I replied to a comment that said We will soon be back to 70s inflation and a whole new generation will find out what fun we had back then.

saying don't forget that current generations have the fun of soaring house costs & wage stagnation.
That poster replied to my point talking about high interest rates & free nursery places etc.
You then decided to interject to tell me that " It may be inconvenient for you but that was the reality". The only point I was making it that's it's harder to buy a house today which somehow triggered you that I was implying they gave them away in the past. 😆

Again picking the bits that fit the story will paint a certain picture.

You keep saying this. Are you saying it's not harder to buy a house these days?

And the baby boomers look aghast when they are called the selfish generation.
Because it’s a ridiculously nasty vilification of an entire generation. I must have missed the bit where I got to sign up to shaft my kids and their kids.

Do you know how many, or should I say how few, went to uni in the 70s?

Do you know how many jobs today require degrees vs the 70s?

@monfuseds

And you think we didn't have that in the 70s? The 70s house prices did soar, they will seem low to you but have a look at what people were earning and what a 15% interest rate on your mortgage looked like. We also had 35% income tax rate as previously mentioned.

Not this again 🙄

We didn't have free nursery places either so it was really hard to work and actually generate an income if you had young children.

Who gets free nursery places?

Are things the same? No. Is everything better? No. Is everything harder? No.

Buying a house is harder

Haven't you heard, free hours at nursery for 3 year olds. Worth quite a lot of money.

I take it you didn't buy a house in the 70s. I did and it was hard. My kids have all bought houses in the 20s, even the one who is still in their 20s. They all have better first houses than I did, they all have a better standard of living than I did.

Haven't you heard, free hours at nursery for 3 year olds. Worth quite a lot of money

But children under 3 also attend nursery? The 15 hours for 3 & 4 yr olds is really not a big government expenditure, I'm not sure why you think it is?

@monfused

Do you know how many, or should I say how few, went to uni in the 70s?

Do you know how many jobs today require degrees vs the 70s?

Yes, because almost 50% of people are now graduates!

@monfused

Again picking the bits that fit the story will paint a certain picture.

You keep saying this. Are you saying it's not harder to buy a house these days?

I'm saying it varies. I've given example of how house prices can go up and down and how easy or hard it is will depend where you are in that cycle. I started off at the top of a cycle and it was very hard, someone buying a year later got a much easier deal than I did, I've pointed out other periods where the same happened.

I take it you didn't buy a house in the 70s.

Nope I bought in the 20s. My parents bought in the 80s, a house for 40k that's worth 2m now. My house was a doer upper & a wreck, but that didn't bother me.

@monfused

Haven't you heard, free hours at nursery for 3 year olds. Worth quite a lot of money

But children under 3 also attend nursery? The 15 hours for 3 & 4 yr olds is really not a big government expenditure, I'm not sure why you think it is?

I'm sure it helps and it is one of the things we didn't have. You just want to pick out how this was easy then and it's hard now, you don't want to consider that it wasn't all one way.

Maybe stop and think that the generation you want to vilify are the ones who fought so you get maternity pay, equal pay, help with child care.

I'm saying it varies.

I'm saying on a statistical level it's harder. Of course there are anomalies. In the same way I would say statistically private pension schemes are less favourable these days.

[quote 1dayatatime]@Blossomtoes

" And if you’re paying 35% tax and NI at 9% on your earnings. It may be inconvenient for you but that was the reality."

++++

So the UK average full time salary in 2021 is £31k. On this you would pay a top rate tax of 20% plus 9% graduate loan tax plus NI of 13.2% from April.

This totals 42.2 % for an average salary which is comparable to the 44% you quote for the 1970s(35% income tax plus 9% NI.

Yes the key difference is the addition of the 9% graduate loan tax and that is because university education was not only free in the 1970s but you actually got a grant of free money to go to university.[/quote]
But VAT was a lot less (7.5% if I remember rightly), no insurance premium tax, petrol tax a lot less, etc. Indirect taxes on spending have rocketed over the years.

@Blossomtoes

Only if you were one of the most academic 5%

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Actually in 1978/1979 , the proportion of 18 year olds going to university was 14%. That compares to 38% today and underlines the argument that so many people today are paying this graduate tax.

@monfused

I take it you didn't buy a house in the 70s.

Nope I bought in the 20s. My parents bought in the 80s, a house for 40k that's worth 2m now. My house was a doer upper & a wreck, but that didn't bother me.

You are proving my point, you parents bought in the 80s when there was a price crash. Timing is everything but you don't know till it's too late.

It won’t change.

If the government want to claw back money, they should target tax relief for me. Basic rates for all.

I'm sure it helps and it is one of the things we didn't have.

But was the equivalent of child benefit means tested then? my parents certainly got the equivalent of child benefit. And I'm sure childcare wasn't as expensive in relation in to wages as one didn't have to be Ofsted registered for example.

You just want to pick out how this was easy then and it's hard now, you don't want to consider that it wasn't all one way.

I'm not sure what you are reading in my posts as I never claimed anyone had it easy. I simply replied to your post about inflation that current generations aren't immune to difficulties because of high housing costs & wage stagnation. You seem to be keen to argue it was much harder for you so go ahead.

My parents bought in the 80s, a house for 40k that's worth 2m now

They’ve done spectacularly well then. They bought a house that cost double the average and it’s out performed the market by more than 100%.

You are proving my point, you parents bought in the 80s when there was a price crash. Timing is everything but you don't know till it's too late.

No, they just bought in a then shitty crime ridden part of London cause they were immigrants.

They’ve done spectacularly well then. They bought a house that cost double the average and it’s out performed the market by more than 100%.

yep, lucky them!

Pensioner’s didn’t even suffer a 80% furlough during lockdowns

What a very bizarre thing to say.

Nobody got their state benefits "furloughed " during lockdown. Why would pensioners be singled out?

@ancientgran

"I'm saying it varies"

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Seriously look at this graph of average incomes vs average house prices and tell me it is not harder to buy a house today compared to the 1970s or that "it varies" from year to year when there is clearly a pretty identifiable trend.