Labour and Pensioners

[Mycatsmudge]

So Labour has declared they will not increase taxes and NI on working people, but they need to raise money for their manifesto promises such as free breakfast clubs, more teachers, dentists etc. To help pay for it all would it be a good idea if they remove the triple lock on state pensions and make pensioners pay NI?

Agree housing is one of the biggest issues. Specifically the need for more social housing.

Including for, perhaps especially for, older private renters. Those 2 million over 50s private renting are highly vulnerable. They're at an age when buying is highly unlikely and they're heading towards pension age in insecure and often unaffordable housing, and studies have found they tend to be the poorest group of private renters.

That forgotten or ignored group of older people should have their needs provided for.

I do think that state pensions should be means tested.
It was not means tested because it was found it would cost more to administrate than to not means test. If people are concerned about economic spending then why want something that costs more money than it saves?

We have an ageing population
I understand that life expectancy is no longer increasing and might actually be falling

@taxguru You might have your mortgage paid off and don't feel you're in poverty and that's great. I don't know what definition of poverty you checked but the fact is there are increasing numbers of pensioners in real poverty, struggling to afford the essentials. Including affordable and secure housing.

Over 4.6 million over 50s haven't yet paid off their mortgage

And 2 million are private renting.

The following info is about London in particular (it's where there's the highest rate of pensioner poverty) but also touches on pensioner poverty in general

This is the type of poverty they're talking about
Unable to access basic necessities such as a damp-free home, access to a telephone or having hair cut regularly

And fuel (heating etc)
More than one in three fuel poor households in London include at least one person of the age of 60.

80-84 year old age group
The proportion of Londoners in poverty before housing costs is higher among the 80-84 age group than in any other age group.

Here's some info about pensioner poverty

https://www.independentage.org/hidden-two-million?

It's also a ticking time bomb. Figures show that the numbers affected by pensioner poverty will increase with the next generation of pensioners.

This is a group that would be heavily affected by any changes for the worse with pensions. Not yet pensioners but heading towards that stage.

Several million over 50s private renters. As the reports and studies by the charities for older people say, LHA benefit rates are frequently lower than private rents. Yet state pensioners are on a (low) fixed income. UK has one of the lowest pensions in the developed world.

Obviously the answer to the issues affecting lower income groups, both young and old, is to NOT generalise by age or any other unhelpful grouping together of widely varied groups. Instead focus on providing for the needs of all in those groups. More social housing would be one of the main ways to address the problems.

The big problem is where to put it. Much of the SE is green belt. What space is there in London? Are we uprooting people and transporting them to cheaper areas where there is space? It’s very difficult to square this circle.

If a pensioner works, they should pay NI. Many retirees have nowhere near worked for 40 years, let alone 45. I would charge capital gains on pension lump sums taken before 40 years of work or equivalent (eg caring duties).

They're the soon-to-be pensioners. So a group that will be heavily affected by any changes for the worse with pensions. (Although obviously any erosion of pension rights will affect younger groups too. Because once it's accepted, it's easier to get people to accept further erosion. In France young people realise this, which is why so many young French protested against Macron's pension age increase).

Some of the 60-64 age group, maybe many, are working. But although everyone ages differently it's a stage of life when it's not uncommon for health issues to occur. Which may impact their ability to work or to work full-time.

Also employer age discrimination against over 50s is a well known issue.

So things definitely aren't good for the 4.6 million over 50s still to pay off their mortgage, and the 2 million over 50s private renting.

Studies found that poorer older people have usually been in poverty for years. So they've never 'had it good'. Others experienced Shit Happens change in circumstances. Like bereavement, illness, domestic violence, divorce, redundancy, caring for a disabled child.

Generalisations ignore the less fortunate. Which is a big reason why there's increasing pensioner poverty. They're too often a hidden and ignored group, so not enough is done for them. That needs to change.

Why do you think pensioners should go tax free?

If they're under the threshold, they won't pay tax.

If they're receiving income above that, it's likely from a private pension, investments or rental properties.

If you've paid into a private pension, you will have received a tax break on that when paying it in - either through salary sacrifice, or the tax break that's granted when you pay into a SIPP (if you're a standard rate tax payer, 20% is added to the SIPP. If you're an additional or higher rate payer, you get the 20% added and claim back the rest on your self assessment).

What about that is money that should not be taxed?

If they're genuinely in poverty, they won't be taxed.

@worrieddaughter97

I may be cynical but I can see the 'just about managing' group being hardest hit.

Those only a little bit above pension credit threshold. Those who have a small and modest private pension to supplement their basic state pension.

Perhaps if a reasonably high threshold was set before taxing pensions it could be ok, but will that be the case?

I imagine too this sort of policy will encourage younger people, especially the 'just about managing' group of that age, to think "fuck it, I won't bother saving for older years".

@worrieddaughter97 Rent isn't tax deductible, so a renter in retirement could have a substantial private pension but still be facing poverty.

(You need a pension pot of around 300k to provide the equivalent of the SP and it still wouldn't be triple locked)

How many renters have that?

Like the pp said, they'll never buy and have been hit particularly hard by increases in rents and the insecurity that goes with renting.

Any private pensions will be taxed of course, whilst at the same time, they will need state help.

I'm on £18,000 a year. 25 and I can't afford to rent.

Why shouldn't I get a tax break? Why should people who have already received tax breaks on their pensions receive another one now?

If rent is going to be tax deductible it needs to be for all age groups. Otherwise it's ageist and leaving the generation who are working themselves to the bone even worse off, when they're in part working to support pensioners.

It is taxed? Anything above the personal allowance is subject to tax, just the same as everyone else.

If you started means testing, it would only serve to discourage pension saving which is the last thing you want to do. It wouldn't be implementable right away anyway, you would need many, many years notice so would achieve nothing except a bunch of people below a certain age stopping private pension contributions and making sure they spent all their income.

People are calling for pensioners to not be taxed

🤷
I haven't heard anyone suggesting pensioners shouldn't pay tax, in this thread or elsewhere.

@Againname

I imagine too this sort of policy will encourage younger people, especially the 'just about managing' group of that age, to think "fuck it, I won't bother saving for older years".

People already think like that and have been thinking like that for a couple of decades at least!

French young people realise how accepting the chipping away of pensions and other social security provision now will affect them later on. I wish more people in the UK realised this. The article is from last year when Macron increased the pension age.

Of course, we’re still young and retirement is a distant prospect for us.

But the more we let them eat away at our rights, the less we will have when it’s our turn to retire.

It’s everyone’s duty to protect our rights, to protect society’s most vulnerable, and to make sure we continue progressing.

https://www.france24.com/en/france/20230208-live-to-work-or-work-to-live-why-france-s-youth-are-fighting-macron-s-pension-reform

Yes I can see it's an increasing sentiment and understandable, but many still want to try to save for the future. Because they're aware that solely relying on state help leaves people vulnerable and lacking choice.

Personally, I think Brown was right to introduce his lower rate of income tax of just 10% for the lower earners. Shame he decided to abandon it and scrap the 10% rate a couple of years after he introduced it!

It would be good, today, to have a 10% rate between the £12,570 personal allowance and the circa £22k a full time worker would be earning on minimum wage. It would really help the lower earning workers. It could be set so that people with wages over £22k didn't get full benefit of it by some kind of tapering as we really wouldn't want higher earners benefitting from a tax reduction aimed solely at lower earners, and make it only available for wages, so people with passive income such as pensions or property rental income didn't benefit from it.

Today's pensioners paid for older people of their day.

Also, you're only 25. You still have lots of time to increase your earnings, change jobs, get a promotion, meet someone to pool your finances with.

Older people don't have that time and are commonly in less good state of health, which further effects their ability to earn (plus there's the issue of employer age discrimination against older jobseekers).

Pensioners are on a fixed income and often have higher costs. For example lots of older people feel the cold more than younger people and are at home more, often less mobile, sometimes housebound. So that's extra heating costs. That's just one example of many.

Also today's pensioners mostly left school at 15 or 16 so started working 5 to 10 years before many of today's younger people. That's true to a large extent for Gen X too. They've paid their share, and also they do pay tax. VAT apart from anything else, and contribute to the economy by spending on essential and other goods (which helps keep businesses afloat and people in jobs).

However, as I've said, all in need should be supported. UK needs more social housing for all ages.

You seem to be making alot of assumptions about this couple. How do you not know they have a wealthy child who pays their cab fare ? The trip to the gallery could be their once a month treat trip.

They had plenty of time to do all of that.

Perhaps we should start helping the young generation in order to foster the growth needed in this country.

The thread is about pensioners and tax, not young people and housing.

The point here is that as younger person in work, you re on 25k & at 25 can increase you re earning potential - a pensioner would need a pension pot of at 400k to get that inc their SP.

Vast majority of (renting) pensioners retiring in the next 15 or 20 years will be fortunate to have 100k in their pot.

What will they live on?

Plus nothing to sell to pay for any care needs.

They have had how long to save?

Why on earth should young people get shafted, time and time again?

They had (roughly) the same amount of time as today's young have to save? The french statement above is quite right and it'll do noone any favours in the long run to penalise being older.

Edit : to correct my misquote!

Except we don't.

Today's pensioners lived in a world where house prices were 2-3 times the average salary. Now they are 8 times that. You used to be able to survive very comfortably on one salary. Now you need two GOOD salaries to make ends meet.

The cost of living is increasing. There's no stay at home mums to look after the children, childcare is unaffordable, the NHS will be a thing of the past, as will the state pension.

You cannot punish the young for their sins of not being born during the baby boom.

They had plenty of time to do all of that.
If you want to take that argument, then someone could equally say you have plenty of time to do that...

Of course your argument also ignores that everyone has different life circumstances. Lots of jobs were low paid. Someone had to do them.

Then there's people who experienced illness or had a disabled child to care for or experienced domestic violence or were widowed young. Shit Happens unplanned life events.

People should have compassion and ensure the vulnerable and less advantaged, including poorer pensioners, have their needs met.

Perhaps we should start helping the young generation in order to foster the growth needed in this country.
Older generation did their bit already.

And why would any younger person bother 'fostering growth' if they work and pay taxes, only to be told to fuck off and suffer when they're older and need help?

Perhaps instead of pitting generations against each other, we should be helping all in need of help. Including more social housing for all ages.