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.

@RockingMyFiftiesNot

But the mortgage interest was tax deductible! That makes a huge difference. You got tax relief (you didn't get the interest deducted off your tax as some people think) - but on massive mortgages because of the explosion in house prices I described and the sharp hike in interest rates. That tax relief didn't prevent the mass of reposessions and people going into negative equity. I saw so many people who were desperate at that time, please don't dismiss the situation.

I am aware of how it worked. Tax-deductible mortgage interest would offset a massive amount of the higher interest rate effect. And means that - combined with the far, far lower salary to house price multiples at the time - that houses was far more affordable than they are now.

It will also be hugely costly. Although, I suppose, it's a way of reducing the unemployment figures. Perhaps they could focus their recruitment on the un and underemployed over 50s - a group full of people able and willing to work but facing the major barrier of widespread employer age discrimination.

But the mortgage interest was tax deductible! That makes a huge difference

MIRAS was introduced in 1983 and after the first five years only applied to one income. It wasn’t nearly as generous as you might think and made very little difference as shown when it was removed.

www.theguardian.com/uk/1999/mar/10/budget1999.budget3

I am aware of how it worked. Tax-deductible mortgage interest would offset a massive amount of the higher interest rate effect.

It really didn't. I wish I'd kept my old payslips and bank statements so I could give you exact figures. I do know our mortgage repayments on an £85k mortgage went up to £800 a month and even almost crippled us. Luckily we could hold onto it but many couldn't

[quote Blossomtoes]But the mortgage interest was tax deductible! That makes a huge difference

MIRAS was introduced in 1983 and after the first five years only applied to one income. It wasn’t nearly as generous as you might think and made very little difference as shown when it was removed.

www.theguardian.com/uk/1999/mar/10/budget1999.budget3[/quote]
Well I am a single parent and it would make an enormous difference to me if it existed now.

[quote Blossomtoes]But the mortgage interest was tax deductible! That makes a huge difference

MIRAS was introduced in 1983 and after the first five years only applied to one income. It wasn’t nearly as generous as you might think and made very little difference as shown when it was removed.

www.theguardian.com/uk/1999/mar/10/budget1999.budget3[/quote]
As would not having to pay a £500k mortgage in the first place because house prices have been so ridiculously inflated.

Yabu. Most people with big private pensions in retirement will have paid huge amounts of tax and NI throughout their working lives. What's the fairness in penalising them with giving them no state pension at the end of it all?

Also, I suspect wealthy pensioners probably spend all their state pension on 'luxuries' like eating out and shopping, which help with employment, so it's not exactly an issue is it.

Maybe question why people get to retirement age without having saved enough money over the 50 years of working life?

Or raise the retirement age, which would be sensible now that life expectancy is so much higher than in the past.

@RockingMyFiftiesNot I am not denying that a lot of people in the 90s did struggle but my MIL keeps telling me that the fall in house prices enabled her to upgrade from her 1 bed flat to her 3 bed terrace;and she wishes the same for me (I own a 2 bed flat and want to upgrade to a. 3 bed flat).

We have had a continued rise in house prices (though London has stagnated since 2017) and this has not been optimal for anyone wishing to upgrade because any rise in their house price has always been accompanied by a rise in price for the next step up. And is the main reason why people keep moving further out and taking on bigger and bigger mortgages. Low interest rates are no good for the middle income when it means that housing become a piggy bank for the rich so the house prices jump 200k, even 300k.

Or raise the retirement age, which would be sensible now that life expectancy is so much higher than in the past

Except it isn't. Or at least, it won't be for much longer.

Even before the pandemic it had stagnated. Long Covid, plus more people suffering long term poverty, will see it start to fall.

Like I said before, a growing elderly population is in large part because the population as a whole is increasing. That is not the same as life expectancy.

Also like I said earlier. Average means many many below, as well as above, the average.

Growing numbers will, with the already higher retirement age, die before ever drawing a state pension. (I need to double check but I believe that we have one of the highest retirement ages in Europe)

Yes some people did benefit from others' misfortunes at that time. I had friends who bought a house they wouldn't have been able to afford a couple of years previously. Great for them and your MIL (and I honestly don't blame them, why wouldn't you?) but devastating for those who lost their homes and a lot of money to boot,
I totally agree that it's a lot harder for first time buyers now for lots of reasons. I see that directly with my own children. However there is always a blanket assumption on these threads that everyone had it so easy back then. In some ways yes of course, like not necessarily needing a deposit- massive advantage) but I'm just pointing out that was not without exception.

As for everyone quoting MIRAS, it wasn't the huge problem solver people are making it out to be. our mortgage repayments were initially around £600 a month. We were stretched as it was. With the interest rate rise (DH has corrected me, it went up to almost 15% not 13 ) we were paying £200 more a month.
I think the basic rate income tax was 25.% so even with tax relief, we still had to find an extra £150 a month from a combined income of £37,5k when things were already tight. That was not easy but thankfully we managed without having to sell the house for less than we'd bought it for.

@Tealightsandd fair enough. But people still have 50 years or so of working life to pay into a private pension to supplement their state pension. There has to be some personal responsibility for paying for yourself in retirement. I say that as a single parent who works full time, I have always paid into a workplace pension. Why should I not receive a state pension, I've paid for it?

me me me.

@RockingMyFiftiesNot my MIL actually sold her flat for 30k less in 1997 but managed to buy her terrace for 100k. She still has a mortgage on it today due to divorce but it is tiny, something like £300 a month. She is 60 this year. Which is why she is still able to live in London despite earning little. It was a good buy as the house is worth £750k today. I checked the rental that they are charging on the same house today and it is £3000! It is near a university so I think the assumption is that students would use the reception rooms as bedrooms so a 3 bed terrace has 5 usable bedrooms and £600 to rent a room is pretty normal in london.

Her 1 bed flat was 3 X her combined income, our 2 bed flat in same area was purchased in 2019 for 5.5 times our combined income (average London property is now 10X average income).

[quote mellicauli]@Fr0thandBubble My Mother is 89. She had cancer treatment earlier this year but up til then she's been very fit and healthy. It's taken 6 months but now she's in remission.

She has been contributing tax to this country for 61 years, had a fine career, raised a family and did voluntary work until 2 years ago. Yet you are saying that her point of need she should have just be left in pain and untreated?

And that you seriously think your life is worth more than hers? She developed the software for one of 1st microchips, a technology that underlies every device around your house. What exactly have you contributed?

I think it would be just be a fairer idea to ask the 4.5 million self employed people to pay the same rates of national insurance as people who are employed? I also think that working retired people should pay national insurance.[/quote]
From next year, people above pension age who are still working will be paying ni

[quote 1dayatatime]@Blossomtoes

" Because. More. People. Have. Degrees

And.why.do.you.think.that.is? 

You tell me what you think.

This should be good.

++++

More than happy to explain.

In essence more people have degrees today than in 1970 because more jobs today require degrees in order to perform them than in 1970.

For example:
Jobs that existed in both 1970 and 2021 such as say teachers or nurses are significantly more complex and technical with more specialist knowledge required than they were in 1970 which means that teachers and nurses often very much need a higher level of education (degrees) to perform these roles.

Jobs that existed in 1970 and today such as doctors or lawyers needed degrees both in 1970 and today.

Jobs that didn't exist in 1970 but do in 2022 such as say a search engine optimisation specialist or a genetic counsellor need the knowledge and expertise from higher level of education (degrees) in order to do their complex jobs.

Jobs that did exist in 1970 that were viewed as skilled but not requiring a degree such as steel manufacturing workers or production line workers are now viewed as relatively lower skilled and outsourced to countries with lower labour costs.

Jobs that existed in both 1970 and in 2021 and that in both times are viewed as relatively low skilled such as fruit pickers is usually outsourced to lower cost migrant workers.

Now I am sure that there are many graduates with degrees that find themselves in jobs such as retail or hospitality that do not require a degree to do them, but this is usually because they have been unable to find the job they wish to do and are admirably working hard in a job they could find until they secure the job they actually want to do.

I think part of your misunderstanding is the assumption that a nursing job today is the same as it was in 1970 when the reality is that it is incredibly more technical and complex even if the basic tenets of patient care is the same.

You also fail to grasp that many jobs that existed in 1970 no longer exist in 2022 or have been offshored to countries with lower labour costs.

Lastly you are probably unaware that a very high proportion of jobs that people do today never existed 50 years ago.

And that's why more people need degrees today. Hope this helped...

[/quote]
I understand a lot of your points but too many employers insist on a degree when in actual fact one is not needed, I was promoted by my employer at age 65 to operations director I don't have a degree left school at age 15 without even an o level, when I started with my employer it was in despatch packing boxes, I went from there to account handler, account manager, customer services manager, customer services director and then to my present position, we have a new HR manager who sent me the person spec and recruitment ad for an account handler in both she stated the applicant must be educated to degree level, you don't need a degree for an account handler position - well not in my company anyway, she seemed rather offended when I told her to take out the clause and one of the reason as you said yourself 'but this is usually because they have been unable to find the job they wish to do and are admirably working hard in a job they could find until they secure the job they actually want to do.' I don't want someone marking time until something better turns up, I want people to commit to my company and grow with it, like the 24 year old we just promoted to team leader, she has been with us for 6 years and again has no degree at all.

@Fr0thandBubble

That wouldn’t be fair. I pay well into 6 figures tax a year - why should I be paying for everyone else’s pension and not get one myself ?

To pay a 6 figure tax bill you’d be earning over £300,000, if you paid 10% into your pension that’s 30K plus around 10k NI, so you’d have a monthly income of around 12K. If you saved half of that, you’d save 72K a year, which equals £1m over 13 years. I don’t think you’ll need to worry about whether or not your state pension gets means tested!

More people have degrees today due to Tony Blair . The idea was to reduce 18-24 unemployment figures with a big push to get as many 16 year olds into 6th form and on to university.

University were made from polytechnic colleges as there was more money for them

Whereas previously you could stay home and attend polytechnic colleges daytime or evening courses, or day release from work, now you’d spend 3 years at university and pay

I don’t think you’ll need to worry about whether or not your state pension gets means tested!

That isn't the point. It's the principle of everyone paying in and everyone getting something out that's at stake here. That principle is the premise of the welfare state. Taking the state pension and free healthcare away from above average earners would result in much lower pensions, reduced healthcare and reduced benefits for all those who couldn't afford to pay privately for those things.

Lots of employers are looking for degrees for no real reason. Half of all graduate jobs are non degree specific they just want someone with a degree because it shows they can work independently.

Remember when lots of colleges and polytechnics got an upgrade to University status?

I agree it was all about getting youth unemployment figures down. It is also when they had YTS schemes and kids working for two years for a pittance. NMW didn't have a look in.

Don't think everyone in their 40s and 50s had an easy ride

Whereas previously you could stay home and attend polytechnic colleges daytime or evening courses, or day release from work, now you’d spend 3 years at university and pay

This is not correct. Polytechnics were always higher education establishments offering degrees and post grad qualifications. You are talking about technical colleges, which were further education establishments usually attended post 16

It was absolutely about reducing youth unemployment. All it’s achieved is devaluing degrees. Blair has a lot to answer for.

Thing with averages and generalisations. It's that huge and varied and very much not homogenous groups are lumped in together - and it's always the less fortunate of each cohort (including groups by age) who suffer.

No one would ever deny this but there still general patterns that can be gleaned from data & statistics, which aren't generalisations.

People are living longer because they were told to live longer.

People aren't just living longer because they were told too or they stopped smoking.

However what is concerning is the widening gap between poorer & richer life expectancy.

[quote Blossomtoes]But the mortgage interest was tax deductible! That makes a huge difference

MIRAS was introduced in 1983 and after the first five years only applied to one income. It wasn’t nearly as generous as you might think and made very little difference as shown when it was removed.

www.theguardian.com/uk/1999/mar/10/budget1999.budget3[/quote]
What MIRAS did do was allow 4 people to buy a houseshare with 4 separate loads of tax relief meaning they could outpay a married couple on single MIRAS or co-habiting on double MIRAS. (The Mail and Express long whined about it "paying to live in sin"). So in London in the 80s, house prices were starting to exclude some people, along with the gentrification of places like Brixton.

Luckily the finance sector fought back with the wonder-weapon for the financially illiterate: "Endowment mortgages".

And are we living longer ? I thought there was an ongoing drive to be a leading nation in reducing life expectancy ? Part of a five-year plan ? Well five years for some.

@Lockdownbear

It is also when they had YTS schemes and kids working for two years for a pittance.

I appreciate "some" employers took advantage of cheap labour, but it worked very well for a lot of youngsters who got their first feet on the employment ladder, got valuable work experience, got on the job training, etc.

One of my closest friends left school with barely any qualifications, and got a place on a YTS scheme at the local chamber of commerce doing menial filing, tea making, etc. She impressed and got taken on full time, did various training courses etc and got regular promotions over the years. She's currently the managing director of that same Chamber of Commerce. She often says she owes her career to the YTS scheme!