Pensions to rise with inflation - but what about working people???

[doris9034]

BBC Website: "Liz Truss and Chancellor Jeremy Hunt jointly agreed to guarantee that the state pension rises with inflation next year - thereby maintaining the "triple lock" - ahead of PMQs this morning, Downing Street says.
In a huddle with reporters after PMQs, the prime minister's official spokesman said the decision reflected the "unique position" of pensioners who are "unable to increase their earnings through work"

But I - and millions of others - are also unable to "increase our earnings through work" because we are in the middle income bracket, our employers do not have the capacity to raise our earnings in line with inflation and we don't qualify for any state related benefits.

So, whilst I 100% don't begrudge the helping of pensioners (many of whom are probably among the better off anyway), I can't help but feeling a bit annoyed that it always seems to be the ordinary working person / family that never gets any respite from the ever increasing cost of living.

If pensions don’t rise with inflation, we’re all screwed when we retire.

I have 15 years more before I retire and OH and I are relying on our state pensions to keep up with inflation even though we will have other pensions we paid into. Half of 1 state pension only pays the energy bills!

those that only have a state pension or pension credit are even more reliant on it keeping up with inflation.

all those rich pensioners being referred to on here - they’re all paying tax on their state pensions. The richest will be paying more that the state pension back to HMRC. It’s not the handout to the rich some people think it is.

But the problem is wages aren't keeping up with inflation. Nor are other benefits. The government refuses to appropriately tax big business. So where is this extra pension money going to come from?

In which case NI will have to be abolished and subsumed into general taxation because it would become pointless. Additionally a lot of retirees would drop out of paying tax so the treasury would lose income.

It is a benefit. The amount of NIC you pay has absolutely XERO relationship with the state benefit you get. State pension is paid according to NIC "credits" and you can accrue credits without paying any NIC, i.e. earning under the threshold for paying NICs, gaining credits whilst on certain benefits, gaining credits whilst being a SAHM (previously called home responsibility credits).

Your only "entitlement" is that by earning NIC credits you become entitled to a state pension, which is a state benefit!

There is no "fund", neither at a personal nor national level.

The "rich" will only pay a maximum of 45% of their government (i.e. taxpayer) funded state pension back to HMRC in the form of income tax, so the "net" cost to the taxpayer is always at least 55% of the state pension payments.

You must think everyone’s maths is as poor as yours. Any pensioner who pays more than £10k tax in a year has returned their entire state pension to the treasury. Very, very disingenuous.

Well said !! I have been through the “ no pay rise” situation for a decade. I have also worked full time for 36 years . So I think people like us have gone through this anyway!

But they'd pay tax on only the occupational pension or other income anyway wouldn't they? If they only had state pension, they'd pay no tax. The "marginal" tax on the state pension on top can't be more than 45% of the state pension - fact. Of course, if they have hefty occupational pensions too, then they pay tax on those occupational pensions - why shouldn't they? They should consider themselves lucky to get a state pension many don't actually need and lucky they don't have to pay NIC on their pensions (unlike workers who don't have a choice re paying NIC on wages). Pensioners have enjoyed tax relief on the amounts paid into their occupational pension schemes so it's right they pay tax on the amounts they draw out as pensions. They should also be grateful for the tax free 25% lump sum they'll have enjoyed.

@Faciadipasta doubt away only not only does my DS support a rise in benefits but also a rise in wages and not because it would benefit him either, as a very successful plumber with his own business it would be doubtful that he would need out of work benefits unless it was sickness or disability ones, as for wages as an employer he gave his workforce a 7.5% wage rise in September, a further 5% is planned in April. Not everyone is selfish in only wanting something they themselves would benefit from personally.

But presumably your plumber son will put his prices up to cover the wage increases, and on the circle goes.

The UK state pension is so bad compared to other countries pensions due to the different way pensions work in other countries. In many European countries you have no separate workplace pension for instance, all money gets paid to the state pension instead hence the state pension is much higher there!

Pensioners have enjoyed tax relief on the amounts paid into their occupational pension schemes so it's right they pay tax on the amounts they draw out as pensions.

Of course it is. It’s also right that we pay tax on our state pension, should we wish to claim it. What’s wrong is to suggest that women like me who have paid NI contributions for over 40 years to fund the pensions of at least two generations of pensioners shouldn’t have ours at the end of our working lives.

And we’re not lucky. Unless you consider half a century of paying tax lucky.

That's some very wacky maths you're using there! They will only ever pay 45% 'back', the remainder is tax they would be paying anyway on their other income.

I consider paying half a century of tax to be neither lucky or unlucky. It normal, it doesn't make someone special.

What’s wrong is to suggest that women like me who have paid NI contributions for over 40 years to fund the pensions of at least two generations of pensioners shouldn’t have ours at the end of our working lives

Pretty sure no one is saying you shouldn't get a pension. Just that pensions shouldn't be the only payment that is subject to the triple lock. Why should pensions get it but not other benefits or wages? When it's the workers who are paying for those pensions, they should surely also be able to expect to keep up with inflation as well

Did anyone say it did?

There’s been a suggestion that pensions should be means tested @Faciadipasta.

It’s not my maths that’s “wacky” @Badbadbunny.

@XingMing

"SOME pensioners are well off, but the vast majority are not. "

amp.theguardian.com/money/2017/feb/13/pensioners-now-20-a-week-better-off-than-working-households

^ This is spot on.

Let's say you have a private pension of £60k, and a state pension of £10k
Total income = £70,000
Total tax payable = £15,432

Now remove the state pension, so the total income is £60k.
Total tax payable = £11,432

The difference between the two is only £4k, 40% of the state pension amount because that's the marginal rate of tax in this example.

You haven't "returned your entire state pension to the treasury", you've only returned £4k of it. The other £11k of tax would have been paid anyway so can't be counted.

I agree.

This exactly

Working people have choices. To seek promotion, to seek a better paid job, to get an additional job. Most pensioners cannot do any of these things. They have a fixed income. Their heating & lighting is more expensive because of their health and their time at home.

My dad died when I was 2 in the mid sixties and my mum had to work. Where I lived we were lucky that there was a good, free nursery and I got a full time place. The resentment mum got from the villagers was horrific - despite the fact that the majority of women didn't work. So there were a few nurseries then.

Tell me, do you want the nurses who staff your local hospital to leave their jobs, or take on second jobs so that they are exhausted when doing their work? No?

How about the signal worker looking after safety on your train line? How tired would you like them to be from their second job?

Working people should be paid appropriately and given a raise in line with inflation. The "get a different job"/"get a second job" stuff is utter shite. It's a very individualist approach, but hugely detrimental to society because we need people to do these jobs and do them well.

The crisis in NHS waiting times due to the shortage of staff is a glaring example of what happens when workers "get a different job" because their employer (our government) won't pay them adequately.

That's not to dispute that yes, pensioners have no choice over their income. But "increase your income with a different job" is not a good solution when it comes to addressing the cost of living crisis for working people.