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

given that weekly care homes fees rack up at about £1500 that will erode any inheritance very quickly. Even faster if there are medical needs such as dementia

Which is why it is better for care home to be funded by the residents capital not current tax payers.

The benefit is often that employers will make higher/ matched contributions above the legal minimum if the employee makes higher voluntary contributions. This is not available when saving into an ISA. This is something that should be encouraged and the Government’s proposed policy means that the majority of employers are stating that they will cut any additional voluntary contributions in future or cut salaries further if they implement this policy.

Why should public sector workers have other taxpayers fund employer NI relief on their pension contributions, raising the employer contribution levels by 15% over what would otherwise be affordable, and private sector employees have to fund this but have their own employers prohibited from doing so even on much lower contributions?

Your father’s particular circumstances do not refute economic data across the entire population/ cohort.

Absolutely nonsense.
Many in public services do not have pensions equivalent or more than the average worker.
They have worked and paid in for 40 plus years and you think they are going to take it lying down
Political suicide!

Not that long ago 2000s those in the public sector told by those in the private that we chose those jobs so suck up the terms and pay, so we did.
Now all those bonuses have dried up you don't like it
😂

Get lazy workshy people back to work, 35% pay no tax, 18-24 year olds sitting around on benefits is ridiculous, we are creating a lost generation
Corporations raking in billions on profits -go after them

They are not paying national insurance.

Ahhhh yes, always the pensioners - who retired far earlier than they paid sufficient tax to fund on average - want the pension age changed for those following behind them because it won’t affect them, but are totally against means-testing their own welfare that they are receiving right now, or abolishing the triple lock.

What a strange co-incidence.

”Keep paying me, gimme gimme gimme, just make it so that my children and grandchildren who’ve paid for this for me get nothing! That’s fair!”.

Just like they did with education, healthcare, opportunities to work/ move abroad, housing…

The most entitled generation in history and so self-righteous that they respond to any attempt to discuss economic facts with personal anecdotes and impressions of a Four Yorkshireman sketch.

Crumbs I think you have issues @222days thats quite some hatred you are showing

Many in public services do not have pensions equivalent or more than the average worker.

Yes, they do. Economic data shows unequivocally that they do when you look at net disposable income (don’t forget that they are not paying NI. As well as most having no housing cost).

They have worked and paid in for 40 plus years and you think they are going to take it lying down
Political suicide!

Of course they won’t “take it lying down”. These piranhas have held the country to ransom for decades which is why there has been no money for productive investment in infrastructure, education, industrial policy etc. that would actually raise productivity and, therefore, living standards. They do not care. They are quite happy to be the first generation in history that left their children and grandchildren worse off than they are.

This attitude exemplifies what I’m talking about and is precisely why the country is in the state it’s in.

Meanwhile they want to blame disabled children/ immigrants/ avocado on toast/ <insert scapegoat of the week>/ (most ironically) “welfare recipients” when they themselves are the largest welfare recipients by far and the only group in society of whom a large proportion receive state welfare of which they have absolutely no need.

How they continue to do so with a straight face I don’t know. I suppose either they must be absolutely shameless gaslighters who care about nobody but themselves, or they are so economically illiterate that they genuinely don’t understand how ridiculous these stupid comments make them look and that nobody with half a brain is buying the sob stories.

Good grief, there are more intelligent pot plants than some on this thread.

Funny how nobody is complaining that Student Loan payments aren’t reduced by paying into a pension.
My DD has to pay 11% of her Teacher’s salary into her Pension, she still has to pay Student loan without that taken into consideration.

Those who are able to Sal Sac have their Student loan payments reduced.

Excuse me while I locate my tiny violin for those who might have to pay a little but more NI because they choose to artificially lower their income.

How can any government take any kind of serious long term strategic action when the public vote based on populism?

We get the politicians we deserve. If one of the next leaders is a Farage or a Polanski with their ridiculous populist bigotries that will be the fault of the voters, nobody else.

Most of this thread includes populist swipes at “generational fairness” and “greedy pensioners living in luxury”. So long as most voters work on bigotry and stereotypes instead of checking facts politicians will have to pander to that bigotry.

The only difference which holds up to scrutiny is economic class difference, not age. A third of pensioners are in fuel poverty, the reason for the triple lock was the shameful number of pensioners living in absolute poverty, plenty of millennials are inheriting property wealth and doing very nicely (and if you calculate wealth by averaging over generations they are set to be the richest in history).

Removing the NI subsidy element of salary sacrifice for contributions over £2000 will make a minor difference to most pension pots. It certainly doesn’t remove the incentive to put money into pensions which is still tax free. Personally I would restrict the tax allowance to basic rate - its always seemed mad that I was given a bigger subsidy as a top rate earner than as a basic rate earner.

I also wish a government would bite the bullet and merge NI and basic tax but it would need to be done over a period of 10-15 years - again long term planning which our voting patterns preclude.

When May introduced the “insurance premium” model for care costs, which was a reasonable idea if imperfect, the populists started attacking the “dementia tax” which killed any attempt to fix the problem.

We also need to look at public sector pensions. PP are correct, this change really only hits private sector DC pensions so it is more of a load on the private sector. The old adage that the public sector trades pay for conditions ceased to be true 15 years or more ago. Its also nonsense to pretend public sector jobs are “harder”. There are tough and easy jobs in both sectors. The public sector has become so big that a huge percentage of costs are now going into DB pensions. That is a bigger long term issue than the basic state pension which has never been more than a minimal level and still trails most of the G7 and Europe.

If you are a pensioner or close to pension age, I am curious: do you believe that your children or grandchildren will receive the state pension? How do you see it playing out?

knowing from my own experience it the house that gets sold. A £350,000 house along with a monthly pension paid for 6 and a half years in a care home.

Your DD doesn’t need to artificially reduce her income because the employers are putting in a huge contribution on her behalf. Public sector employer contributions are huge compared to the private sector.

Your DD has the option to opt out of her DB system and instead put money into a DC system and claim the tax reliefs.

Oh and of course, private sector staff paying into DC pensions are not getting their student loans reduced, they are paying over a longer term (ie paying more).

As you say - pot plants.

No-one is avoiding tax. It is a legitimate scheme. You pay tax when you use the money as your pension, once you're old enough to draw it. It is to encourage people to invest in their pension and then they don't get taxed twice.

My “issue” is that I’ve spent my career working in economics and I’m sick of all the nonsense posted about this when the facts and data speak for themselves. My “issue” is that I don’t think that the current working aged population and their children and grandchildren should have to live on “crumbs” just to placate the most entitled, selfish and self-righteous generation in history. Doing so to date has done an immense amount of harm to the UK economy and living standards already and it needs to change, urgently, for there to be any hope for the future.

There are, of course, some decent people in that cohort and of course those people would absolutely agree that these generational inequalities need to be addressed and that pensioners will need to accept that significant changes need to be made that - for once - are not for their own benefit.

This is the fundamental issue above all others that is wrecking the UK economy. The vast majority of other economic “issues” raised on this and other similar threads recently are insignificant nonsense in comparison and just people’s personal gripes that would make no substantive difference to UK prosperity or living standards either way. Perhaps it’s just innumeracy in a large part of the population. Regardless, facts remain facts and at some point the UK population will have to cease to ignore the large-bottomed, large-eared grey animal currently drowning those below retirement age with the water it is squirting from its trunk. 🐘

Piranhas?
WTAF!
My DM was a nurse who worked for 40 years, nights, days, weekends, Christmas.
The average nurses pension is £11400 per year
If you think that women like her shouldn't get a reasonable pension you are a psychopath .

But you are not working on data you are working on sweeping populist assumptions.

Start talking about high earners vs low, DB vs DC, the balance of public vs private, long term merging of NI and basic rate tax and I’d be interested.

If you persist in wild generalisations about the “richest generation evah” then you don’t need to worry about the next one because they are busily inheriting that wealth and becoming the even more “richest generation evah”.

There is real poverty in the older generation and significant wealth in the up and coming generations. We won’t have a fairer society until we focus on economic differences rather than arbitrary groupings.

Perfect example of what I’m talking about: respond to posts about economic data with personal anecdotes as though this in some way refutes it. 🙄

Consider the bigger picture … a salary sacrifice scheme is just one of the current schemes available to encourage people to proactively save more for their own retirement (& potentially make them less reliable on state support).

Take it away and less people save.
Less people help themselves to be self sufficient.
More reliance on the future state.

So do you think public sector pension schemes should be scrapped? Closed to new entrants from a certain date? The government is going to have to fund those who are receiving payouts as the schemes are unfunded.

Do you really think people will give up the remaining sizeable benefits because the benefits are very slightly smaller than they were before? It would be cutting off a nose to spite the face.

This thread is a perfect example of the hate and bitterness towards public sectors pensions. You know, those who look after the sick and deliver your babies, who teach your children, who empty your bins and clean your streets, who answer your 999 calls , who put themselves in danger daily.

Most important of all - Our armed Forces and those who are being remembered right at this moment all over this country and the Commonwealth.

In any system there is going to be bitterness when there is a divide - so public vs private pension, old vs young, etc etc

and politicians thrive on stoking it up

With good communication, one would hope not, but few companies are willing to spend money on this. There are surprising number of people who have little to no understanding at all of how pensions or salary sacrifice works (including the OP, it would seem).

On and on it goes in this thread, it’s so depressing. There’s fuck all that’s great about getting old, and some in here grudge a measly state pension that is nowhere even near minimum wage and doesn’t compare well with many other European countries). And, other than NI, it really doesn’t need that much from a private pension to have to pay tax.

All this the country can’t afford it. Millionaire pensioners so many of them. How about looking more closely at those millionaires whose income is taxed less than workers? Again, should these also happen to be pensioners then equalising tax from all sources surely is fairer?

So here’s an idea Equalise pensions with the so called living wage. Increase the personal allowance for all. Combine NI and Income tax into a single tax everyone pays at a certain level. equalise tax from all forms of income and smoothen cliff edges. (That will give those who are going on about pensioners being a drain and not contributing - god forbid hey that a human being develops more illnesses and conditions when older, not great fun I tell you!).

i still think salary sacrifice schemes are wrong, can you imagine if you were allowed to have a pretend salary at the lower end of income. I believe it’s mainly those in the highest salaries who benefit both from pension tax relief and salary sacrifice schemes.

This is a fact - the money I have invested in stocks and shares ISAs has way out performed my husbands defined contribution pension. I manage my investments, not someone else. My aim is to be an ISA millionaire by retirement and take a tax free income, on top of other pensions and investments. I don’t earn a high wage, but I am a good investor.
The younger generation focuses too much on house prices for the retired generation, forgetting how hard it was in so many other ways. There is absolutely no way anyone working today would want the conditions of past generations. Yes they bought their houses for peanuts, but what a crappy life many had.
my Father had a very tough start in life, so is very resilient. Shame that same resilience is rare today.