Salary sacrifice to be taxed

[SomethingInTheAirToday]

https://x.com/politlcsuk/status/1986914552093745592?s=46

not only are my generation not going to have a state pension or private healthcare, but we also can’t save into our own pensions because we need to fund the current generation.

this makes me so angry

Here you go.

Spot the person who has never worked in the private sector. Yawn.

i don’t understand why people (I guess primarily public sector employees) cannot see that this is wrong.

if the government want people to save for retirement (which they need to do to allow the future removal of the state pension) they have to level the playing field of pension taxation.

I don’t understand why it isn’t tied to size of pot and age - I’ve undersaved (like many other DC scheme holders in private sector) due to having to take more time than expected with dc with additional needs in my 30s. Many women take a pension hit due to caring reasons - whether it’s kids, parents, etc. of course I’ve lost out on salary and promotions for the same reasons.

I’ve been trying to recover my pension the last three years through salary sacrifice due to paltry 3 percent employer contribution, and I’m so upset that they are going to take money off of me in this way.

Do they want even more poor female pensioners?
seems like they do. Yep, so glad Labour are righting these wrongs.

who do we think this will impact most? Women / carers already have crap pensions.

How can anyone make any kind of long term pension plans for retirement when EVERY government, no matter what party, can't resist messing with it. It's so utterly destructive.

Labour have the data - they know this NI tax grab is going to affect people with already poor dc pension pots the worst. Maybe not in £ terms but in lost pension pot size.

No they haven’t: the vast majority of the public sector still have defined benefit schemes, many of them unfunded.

I think you may be confusing defined benefit schemes with final salary schemes. Both “final salary” and “career average” (or similar) are types of defined benefit schemes.

Absolutely agree. Successive Governments have been told in report and report for decades that the most important thing they need to do is provide a stable platform so that people can trust the system i.e. stop messing around with the tax arrangements!

Given DC pots are really glorified long term saving scheme I don’t know why the govt is allowed to interfere continuously either.

no idea how labour can think introducing something that’s going to drive DC pensions down further is a good idea….what a bunch of idiots. It’s again poorly thought out - they think they’re getting people with big pension pots and that’ll be the sound bite claim but the impact is going to be felt by a completely different group of people scrambling to scrape together a decent pension.

I just find it unbelievable that anybody could be contemplating telling taxpayers that we will all continue providing national insurance relief on the 25-30% employer pension contributions for public sector workers in defined benefit schemes and meanwhile have this relief removed for those in the private sector with already far less generous defined contribution pensions.

It’s outrageous.

And will be passed on to employees via lowered employer contributions and lower overall salaries. The employer surveys on the policy have been crystal clear about this.

If they are going to do this it must be applied to all schemes so they’ll have to be letting all public sector workers know that their pension payments will be reduced by 15% because the taxpayer isn’t funding NI relief on their employers’ contributions anymore, either. Otherwise, I think there would be very good grounds for taxpayers with DC schemes taking the Government to court.

I’m going to write to my MP and make all of these points and suggest others do the same. This is one of the most idiotic and economically damaging policies I’ve seen proposed, especially having clobbered private sector employers with more national insurance last year already! And clearly they’ve learned nothing at all from the effect that has had on the economy, being one of the main reasons why there is now another shortfall in tax revenue. It really is astonishing.

Just like the employer NI tax raid from last year netted me a 1 percent pay rise this year…well, at least my employer at 3 percent contribution can’t go lower on my pension - but they can and are once again looking to reduce headcount…

Charging them more would be unfair. Unlike young people they down have an opportunity to increase their income. Even if they sell their home they will still need somewhere to live, and if they need to move in to a care home the government benefits from them being able to pay for the care for all or part of their stay.

Again: as a cohort the current retirees are paying, on average, £200k less in tax in real terms over their lifetimes than they are extracting from the state in public services and welfare. So yes, it is too generous to pay them £1000 per month in welfare, regardless of whether they require it or not, because they have not funded this and working taxpayers can’t afford to do so.

The state pension needs to be means-tested. 25% of the people receiving it are millionaires and perfectly capable of supporting themselves. A further 25-30% have occupational pensions that provide them with a net income that exceeds the average income of a full time worker in the UK, while they have no childcare to pay, usually have no dependents, and the majority of them have no housing costs. That is completely unsustainable. Removing the state pension from these people who do not require it would save taxpayers £80-90bn per year. This saving can be made without causing any poverty for pensioners whatsoever.

This largesse - which is precisely what it is - is why public services and infrastructure is falling apart. This cohort have held the country to ransom for far too long already.

As for the triple lock, it is apparent to anybody with a basic grasp of mathematics at the level of a primary school child that it has to stop because if it continues indefinitely it is a mathematical certainty that eventually pension payments would be larger not just than 100% of all tax revenue but the entirety of GDP! It was never intended to be permanent, and nor can it be. This is a simple mathematical fact.

So “DFO” yourself.

They need to stop disincentivising aspiration as they are killing growth

and they need to stop leaking and just figure out what they think will work and have the courage in their convictions

today a no 10 source has leaked to the DM that left wingers are bullying starmer into a mansion tax. That very much sounds to me that a mansion tax is coming in and starmer doesn’t want to lose the middle class vote so is trying to convince everyone it wasn’t his idea🙄

What utter nonsense. A large proportion of private sector employers (pretty much all who know what they’re doing because it is better for both the employee and employer) use salary sacrifice arrangements for all employee pensions.

SIPPs most certainly did exist when current retirees were working-aged. They could have set up a private pension scheme at any point if they did not have an occupational pension. They lived through the most prosperous period with the largest asset growth in recorded history so if they chose to blow all of their earnings and save nothing then that is hardly everyone else’s fault.

It’s to fund the benefits black hole which is spiralling out of control. Stop with the ageism @SomethingInTheAirToday

Over 50% of the welfare bill is spent on pensioners, a large proportion of whom have no requirement for it and are absolutely capable of supporting themselves. That isn’t ageism, it is an economic fact.

It’s pathetic, isn’t it?

And that ship has already sailed. I’m sure one of Starmer’s advisors must have made him aware of the opinion polls over the last year or so. They have zero hope of being reelected so he might as well do the right thing now and actually implement some measures that will improve productivity and growth so that people have some hope of rising living standards in the future.

At least then, in time, he might be seen more favourably when that legacy comes to fruition after they’ve left office. Instead they seem determined to continue the destruction and set fire the the ruins.

Pensions are taxable income. So retirees with state and private pensions are paying tax.

The Social contract is that people pay in over their working lives and in return there are benefits, healthcare and pensions. Any change needs to come in over time just look at the chaos created with public sector pensions moving to CARE schemes and the issue with WASPI when the state pension age increased.

Government needs to increase state pension age again if it is to bring more changes. After all we are living longer and healthier then ever (on average)

The government will get their pound of flesh from the current generation of pensioners - be it care home fees or inheritance tax

as the saying goes - there are two things in life that are certain, tax and death

i I don’t want to go back to when my grandad was retired and pensioners were in poverty. They just need to rethink the triple lock as it’s not sustainable.

Exactly. Indefensible, logically inconsistent, will exacerbate existing inequalities between public and private sector and across generations, quite obviously would be immensely economically damaging both now and in the future (because we desperately need everyone to be saving for their own retirements!). It’s the most clueless and damaging policy I’ve seen proposed in quite some time, completely idiotic. It will have myriad negative impacts on the economy as I set out earlier and not one positive effect, and all rationales put forward to attempt to justify it have been incoherent and untenable.

Why the moronic Chancellor is not listening to the numerous independent and robust reports published in recent years from independent economists from across the entire political spectrum (based on robust analysis of economic data that has been statistically validated) and actually taking measures to remove the perverse incentives and cliff edges in the tax system which would almost instantaneously raise productivity and growth and tax revenue is beyond me. Instead, she seems determined to exacerbate the problems! Total incompetence.

Either she is extremely thick or she’s somehow been caught in a honey trap by Russian intelligence. 😆🐝

what is the point, if you don’t reduce your tax liability. Stocks and shares ISAs give you growth and you get tax free income.
i can see you are another empathetic person…
Salaries were lower then. There were very few benefits. So they were not a strain on society.
if you take my 89 year old Father, he has never had a single benefit ( apart from pension), never had a hospital stay and is on no medication.

No it needs to levy some form of NI on pension and also get public sector and broader benefits under control.

Don't raise the retirement age. People might be living longer but health and quality of life are better closer to retirement age, if a person makes it that far. Allow people to save for their retirement.