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.

But we are in this situation precisely because nobodies income has kept up with inflation. Continuing to suppress wages and benefits is just kicking the can down a dead end road

But we are in this situation precisely because nobodies income has kept up with inflation. Continuing to suppress wages and benefits is just kicking the can down a dead end road

If every business puts up its prices by inflation to pay staff an inflation pay rise, then inflation will stay the same. Nobody benefits!

The truth is wealth is being funnelled upwards from the working classes to the super wealthy and the Conservatives support that. So long as people vote the Conservatives in, contrary to their own best interests, they will get poorer!

@kitcat15....I understand that you're saying you paid off house and 6 figure savings/private pension is not enough and that you're entitled to a state pension in line with inflation..but what do you say to the kids in schools that go hungry, kids of FULL TIME WORKING parents, not poor enough to fall under free schools meals system, but not affluent enough to afford to pay school meals fees.

I'm sorry, it's simply greed and generational entitlement.....it's this thinking that's got the Tory's in and bar one season of Labour next time, will get the Tory's in again, and again.

Pensions and winter fuel allowance should be means tested. Even it if costs more in admin costs, it's the principle that you're wasting money on millionaires that don't need it, while those from working class and poor backgrounds starve.

People should be encouraged to heavily pay into private pension schemes in the working years early on, so the majority of people rely on a private pension, and not feel entitled to a state pension. There needs to be a culture shift on this, it's the only way it's sustainable long term.

Governments should make more land available, planning wise, and mandates for rapid and extreme house building, so houses are affordable for young generations. This has a knock on effect, if young people can pay their mortgage off in 10-15 years, instead of 30-40 year current mortgages, guess what? They can put large amounts into private pensions. Relieving the burden on the state, come state pension time.

If pensioners try to offload their wealth to children to become entitled to means tested state pensions, they have current measures in place, 'deliberate deprivation of assets', by old people avoiding care home fees, which can be employed to enforce a means tested pensions system.

NI should be abolished, with simple tax put in place, which taxes wealth the same as earned income. This would get rid of the sense of entitlement that 'I've paid my dues'. No, your NI contributions likely are MUCH LESS than the money you would get from a state pension for 30 years of retirement. Current systems have too many loopholes that make it easy to legally avoid tax for the mega rich. These should be shut down.

Before any one says I'm racing to the bottom, no I'm not. It should be one rule for all, if pensions are inflation linked, so should everything else. Wages should be higher, it won't make inflation worse...it will help people survive this winter. In the long term....high wages benefits everyone, people will have money to spend in shops, non essentials etc.

To the people saying means testing pensions rewards laziness, while not rewarding savers and hard workers who are doing the right thing...I say, hard work should always pay off, compared to laziness. But those with large sums invested in private pensions and live in large houses in costly areas....do have a much higher quality of life and living standard than a person solely on a state pension, using pension credits or whatever old age benefit etc to top up the older person renting a room in a private house share with strangers, and skipping meals and getting pneumonia in the winter due to avoiding putting the heating on. It's just that at least with a means tested benefit linked to inflation, at least that old person won't die of pneumonia or starvation and will not die. At least give them that.

You're replying to a post about the top rate (45%), but only 629,000 people are paying the 45% tax rate in 2022/23, not 'millions'. Approximately 0.9% of the population.

www.rjp.co.uk/higher-rate-tax/

That's the additional rate. About 6 million pay the 40% bracket.

I'm very grateful the triple lock has been reinstated (for now). I worked hard for over 40 years (often working three jobs to help myself and my family) and every little helps - especially now. 🌹

😳 read the room

But that poster was comparing it to the old 90% bracket. It's only a sensible comparison if you compare to the highest current rate.

I was referring to the 40% rate, its hard to keep up with which tax rate is in or out atm.

Strange though, as apparently these people earning over 150k also paid £61 billion in tax (2020/21), so one would to assume a considerable number are earning far in excess of 150k
But what is even more odd, is that in 2010/11 the total tax from this group was 35billion, that certainly isn't accounted for by a 5% rise in tax, so we must assume that during a period of almost no income growth for you or i & austerity, the amounts and the numbers earning 150k has risen considerably.

The current tax and wage systems in the UK benefit who exactly?

I disagree, state pension should not imo be means tested……My savings will pay for the extras until I get my state pension….. …..my nursing pension is more than the state pension and just enough to live on but that’s all…..I’m not greedy…I just want to enjoy my retirement ……and I need my state pension for that as my savings will likely be very low by the time I claim my state pension in 9 years ….I don’t have any private pensions…just my public sector nhs one…I’m certainly not mega rich😂….. there is no incentive for me not to have taken my nhs pension at 55….it was there waiting for me…same as every other nurse of my age who has been in nhs pension scheme…..I don’t live in a large house…just a 3 bed Victorian semi….but it’s just how I want it …..I may not live to be 67 …but if I do I certainly won’t feel guilty for claiming my state pension

Means testing pensions would mean removing the link with NI so there’d be no point in having it any more. Just subsume it into general taxation. How do you means test wealth?

If you’re excluding someone’s principal residence, everyone will just invest all their wealth in their home so you’d have more older people living in houses too big for them. If you exclude their occupational pension pot, they’ll up their contributions so the tax on that money is lost. If you discourage wealth more people will qualify for having their care home fees paid for them - the cost of that dwarfs the cost of a £10k a year pension.

Means testing for state pensions doesn't have to be at breadline levels. They could use an income level of £50k like the child benefit claw back. That way the vast majority of pensioners wouldn't be affected. Just the ones with hefty private pensions or rental/investment income who really don't "need" the state pension anyway. Easier to administer too as it could be done via self assessment tax returns in the same way as child benefit.

People have paid in for their state pension, a Pandora's box of legal challenges if they became means tested.

The temptation for future Govts would be to not increase this 50k threshold, see the higher rate income tax for what can happen to once generous thresholds.

But what does "people have paid in for their state pension" mean? There is no pension pot. Your NI contributions are not put aside ready to pay back as pension. (If they were then your pension would likely run out long before you did). This perception seems to be part of the problem. NI perpetuates this I think and should probably be got rid of as a seperate tax and just added into general taxation.

This.
There has to be a way. A middle ground somewhere. No starvation or frost bite for anyone. But at the same time, working hard needs to pay off more than not working as hard (exempting disability/significant caring responsibilities).
I just think that the current state of affairs needs radical revision. It's unsustainable, and the Tory's who normally are all for austerity and cuts for the rest of the population, are kicking the ball down the road because it would obliterate the living standards of their core voter base, the boomers and older.
The revision will be unpopular, it doesn't have to be bare bones breadline, but it does have to be done. The comforts of the older generations, can't be afforded by the starvation, poor housing and poor education of our children, which is what's currently happening.

Yes we must support and care for older people, there's no denial of that. But if we don't support younger generations, equally, you wont get the capable and competent workforce needed to sustain the economy, pharmacists to prescribe medications, GP for medical appointments, instead you'll get higher numbers in the prison systems, mental care care systems, suicide, etc.

Humans are successful compared to other species, mainly because of our intellect, but mostly because we work together as a society to benefit everyone, not just a certain generation or just the upper or middle classes, but everyone.

You can go on the Gov.uk and see if you have "paid in" enough qualifying years for a state pension, currently 10 years min.

The fact that the money from NI isn't ring fenced is neither here nor there.

Still, nobody has tried to explain what will happen in a generations time when millennials start to retire. Having also paid in, but saddled with student debt, mortgaged right up to retirement age or beyond unless stuck in private lets, fewer children and decreased immigration and stagnant wages.
Benefits of any kind, should be for those truly in need. The burden of taxation should be on the very wealthiest and work should bloody well pay.
Some of the today's pensioners don't appear to care very much about anyone else.

NIC should have been scrapped decades ago when the link was first broken between "paying" NIC (then called the stamp), and getting credits without paying. Now, you can gain annual credits without paying a penny, i.e. low earners above the lower threshold, home responsibilities, on certain benefits, etc. A lot of the "I've paid all my life" brigade really havn't! When it all started, it really was an "insurance" system where you paid your stamp (i.e. the insurance premium) and you got your benefits when needed. Now it's just another tax.

It's all been made worse by tinkering over the decades by the politicians, i.e. graduated state pension, SERPS, state second pension, etc., all of which were aimed at "linking" your state pension with the amount you paid in, i.e. the more contributions you paid, the higher the "earnings related" element of your state pension. Even more complicated with being able to "opt out" of the earnings side of the state pension and have some of your NIC contributions directed to your private/occupational pension instead. All that's now gone, leaving just legacy benefits payable to those who've already started to draw them (obviously on top of normal state pension).

Now there's no actual link between what you've actually "paid" in NIC and the state pension, it really is just another state benefit, and it's right that it's means tested, though as I've said above, at a pretty high level. People with very high occupational pensions, really don't NEED state benefits in the form of a state pension. Likewise they don't NEED a winter fuel allowance.

If that's politically unacceptable, then do it another way. Enact NIC contributions on occupational pension scheme pension payments, so that someone with a £100k pension pays the same tax/NIC as a worker with a £100k wage. It's grossly unfair that workers pay a hell of a lot more tax/nic/student loan deductions, etc than a pensioner with exactly the same income!

I think current generation pensioners needed to be handed their entire NI contributions back, in the form of state pension, no doubt this would get used up far quicker, once that's used up, it becomes means tested.
To the ones that pass on their home to their kids to meet the means test, or whatever, there are current laws in place 'deliberate deprivation of assets', which can mitigate against this (currently implemented to mitigate for asset rich people trying to avoid paying for their care home fees). If they don't meet the means test, they can use liquidate their assets, downsize their property, get a reverse mortgage.

It's not popular I know. But if cheaper housing was readily available, and wages were reflective of living costs, there would be little need for the next generation of relying on a lottery of whether or not they get an inheritance. Instead young people, regardless of background, could work hard and save aggressively for a couple of decades and own their own home outright, like the boomers had the opportunity. Young people would have no need for your inheritance. So you would be able to afford to liquidate assets if needed, without the guilt of leaving your children and grandchildren penniless.
I know it's not popular....I will get slated for it, but think of your children coming into hard times (the inheritance you gave them, they have to split/loose, with their now ex husband/wife via divorce), your adult child now has to start over in life, without your inheritance, wouldn't you want them to live in a country where inheritance doesn't matter? They can work hard and start afresh again, and it's realistic and possible, because it's affordable.

Nail on the head. Today's pensioners may have paid NIC (though some havn't paid much at all, if any), but at much lower rates. NIC rates have steadily increased over the past few decades. Those now enjoying state pensions etc paid less NIC than today's workers. And yes, today's workers are paying lots of tax, nic, student loans deductions, and are HIGHLY unlikely to benefit from a state pension when they come to retire as it's just a giant ponzi scheme that will ultimately come to an end! Today's workers are expected to pay workplace pension deductions ON TOP OF NIC deductions, so are paying towards their own pensions AND towards the pensions (often not needed) of the retired generation.

Many of those who now receive their state pension would probably also paid into a work place pension and been contracted out of SERPS so paid a lower rate of NI. Contracting out ceased in 2016 so those who now pay into a pension scheme have to pay full rate NI.

People who were contracted out got a lower pension. People who are or will get the new flat rate pension will have to have enough years (is it 35 now?) not contracted out to get the full pension.

You've got it exactly right!

It was a lower state pension but their work pension guaranteed to pay at least equal to the SERPS element. Now we have to pay full rate NI and full rate private pension conts

YABU

Have you looked at the State pension rate lately? Could YOU live on it, particularly as you become older and frailer and need domestic help, or heating on all the time, or extra medical or personal care.