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?

I know it isn't a genuine insurance. But it started with that intention and it's still largely understood that way.

When the government are looking at sweeping changes to pensions, they do generally consider what people reasonably expected.

It's why the pension age changes don't happen overnight. The government are committed to giving at least 10 years notice, so that people have time to mitigate the change. The WASPI legal challenge shows that if the notice given isn't enough from what was reasonably expected then people will fight back legally.

Changing the name of the tax doesn't change anything materially. But it potentially does change what people could claim to have reasonably expected

In 60.

l paid huge childcare fees in the 90’s ( no subsidies)

Then you have to support your dc through uni.

There ain’t that much left over to save.

Most of my pension comes from a single source having worked for one organisation all my working life. It's ridiculous that that would mean I would pay more NI than someone with multiple pensions.
And yes, there is wiggle room in my retirement budget but to change the tax rates as much as is suggested to compensate for lack of NI contributions is a big hit.

I still come back to the point that younger people will regret encouraging govts to hammer older people in years to come. It's not the answer.

@strawberrybubblegum The link between NI and benefits just isn’t there. The word insurance is just ridiculous. It’s a tax. Unfortunately the public cling on to its original intention and clearly do not understand fiscal policy. Yet they will shortly be voting for parties that control most of our fiscal policy! Whet people think and what is the truth frequently aren’t the same.

@Chewbecca Why should ALL income, irrespective of source, not be taxed in exactly the same way? Why should older people expect concessions? I’m a pensioner. I have an occupational pension mostly paid for by the state. I’m fortunate. Do I deserve to pay less tax than younger workers? No. I don’t see that I do. We are equal.

In the 90s, my childcare was 50% of my earnings. I was fairly well paid. Many people pay a much higher percentage now. However it isn’t forever!

My issue is more with changing goalposts overnight. Not ok.

Plus the fact we will all (🤞) benefit later in life so it isn't something anyone really should be in favour of!

Difficult to say all will benefit in the end. Depends what your income is! For many younger people not as good! No final salary pensions for a start! Who said immediate change? Hunt hasn’t, I agree that there should be an sim to simplify tax and for greater equality when some have had far more chance than others re pensions and capital.

Plus: I got my pension from my work earlier than everyone does now. I had to wait for state pension but younger people will wait longer and work longer. The old simply want it all. Some need help but millions do not.

The old don’t simply want it all. What most pensioners want and expect is that the social contract we signed up to at the beginning of our working lives is honoured. We’ve paid the pensions of two generations in the expectation that we would have ours paid. It’s not our fault that successive governments which have had 70 odd years notice that there would be a dramatic increase in the pensioner population have kicked the can down the road.

Younger people won’t work longer, they’re no longer starting full time work at 16 and a high proportion of them don’t start work until they’re in their early 20s. The majority of current retirees have worked for 50 years.

I'm not sure what you are saying. We all do pay tax in the same way. I pay a % of my pension at a higher rate.

Labour however is talking about a system that is NOT equal eg their problem with the lifetime tax allowance. Well we're going to stop all of this nonsense, oh but wait that will mean that certain people might put less away in their pension or stop working earlier than we want them to, oh ok we will let them have an exemption of x amount , oh hang on a minute that's not equality for everyone , oh they won't notice....Labour don't even have a policy for this. It would also take years to pass through the legal system.

I would love to know what Sir Keir is doing about his allowance! Oh wait he will have financial advisers who manage it all via trusts etc. Anyone who thinks he will be on an equal footing with him is deluded.

I tick the WASPI box too!

Ah the caring face of conservatism!

Rent support is nowhere near the cost of the actual rent, its been frozen for years.

A broad brush "couldn't be bothered to save/private pension/buy a house/earn more money....

Maybe they did a low paid but essential job? had health issues? had to care for a parent?

We are all different.

Poorer pensioners are not "well looked after" they struggle, they get little little help and will be at the bottom of the pile for care, as unlike the better off, cannot buy help, they will also go to the worst care homes, wont get therapies for dementia or music or the extras many well run private homes can give.

Bundling NI into income tax will hit pensioners with a small private pension far more than the better off with substantial pension provision.

Its a policy designed to give us the sort of the "benefit system" the USA has & we are already a long way on the road towards that.

A progressive tax, like income tax, is the same for everyone. NI isn’t. It’s just for those working. We do have many well off pensioners with decent incomes. I frankly don’t care about what I “signed up to”. I’m effect I didn’t. Fiscal policy changes. Governments change, the money available changed. Why would anyone think taxation policy is static? Never has been and never will be. It must reflect our priorities and ability to pay.

@TizerorFizz 'Why should ALL income, irrespective of source, not be taxed in exactly the same way?'
This is a legitimate question and it sounds as if you think there aren't any reasons, but in fact there are. The short answer is that to do so removes the government's ability to encourage certain behaviours and to discourage others. @strawberrybubblegum posted at 8.41 about how keeping NI makes it a cheaper way to encourage people to work than simply increasing income tax. There are many, many other examples.

Simplicity in tax is not necessarily always good. There is an inherent tension between fairness and simplicity, which is partly why we have such a complex tax system. It's interesting to discuss where the balance lies but I don't think it's at either extreme.

I cannot agree that NI encourages people to work. How does a tax do this? It’s a total lie to sell it as “insurance”. It isn’t. People fall for rhetoric that’s inaccurate. A tax is a tax. All income should be taxed via one “income” tax. I cannot see why working people pay more than those getting the equivalent and not working. It’s not a case of putting money in and getting it out. If that was the case, use private pensions for everyone. As it is, working people are paying NI and income tax for old age pensions and benefits for our existing population. There needs to be some understanding that it’s a step too far. I certainly could see an amalgamated tax being introduced at a higher threshold and at the moment, not reducing thresholds has been the favoured method of raising tax take. Not necessarily a rise in the percentage levied.

Plus older folk mostly don’t have the worry of mortgages or very high childcare costs. They do have bills to pay but can downsize. They can even continue to work. We do have more people aging and fewer paying tax. Fewer being born. Something has to be done to sustain benefits. If the better off won’t pay because they believe in a contract that never existed, then whom? And don’t say business! They are trying to grow and employ people!

I'm a pensioner. I've made a list of my manifesto ideas, it would probably alienate every single voter in some way.
One of them is to charge pensioners NI but call it health and social insurance. As for under pension age only those above a threshold would pay it and also the same as NI it wouldn't actually be ring-fenced.

Plus older folk mostly don’t have the worry of mortgages or very high childcare costs. They do have bills to pay but can downsize.

Except that a significant minority of older people do have housing worries.

4.6 million over 50s are still paying off mortgages.

2 million private renters over 50.

And the numbers of older people in housing insecurity is increasing. They're at an age where they're heading into retirement and or poorer health without the housing security needed on a fixed income (pension).

With childcare costs. Not all, but lots of grandparents save their adult DC loads by providing free childcare.

As for downsizing. Where? Lots of areas don't have affordable age appropriate housing for people to downsize to.

Also downsizing unfairly harms single people, the childless and childfree, and only-child families. Who deserve decent affordable housing as much as anyone else. Incidentally, and perhaps related, statistics show that more single pensioners are in poverty than couples.

They can even continue to work.
If they can get past the widespread employer age discrimination. Also, although lots of older people are in good health, the older someone gets the more likely they'll have some health issues. Which often means working isn't an option.

On another thread someone posted about the issue of 'job blocking' (partly a consequence of the increased state pension age). There's already fewer job vacancies than people on jobseeker benefits.

We do have more people aging and fewer paying tax.
Life expectancy is no longer increasing (and I understand it's actually falling).

Everyone already pays tax, working or not. Plus other economic contributions. Including buying goods and services, which keep businesses afloat and people in jobs.

Constant sob stories! Employers want their skills! We have a skills shortage and older people leaving the workforce early don’t help.

Plus 50 isn’t old! There’s 15 years plus to make changes. Those who rent often made a choice to rent. As my family members have. Their choice as they didn’t want house maintenance costs. Others were ok with making an effort to get a house.

I certainly think we need more social housing to help those renting privately but many older folk are in housing association houses. There are also very many single people who prefer not to work full time and take benefits instead. I’ve family members making this choice too . Families split up and one parent rents but doesn’t work. We need housing for two families as a result. It’s difficult for the state to provide so much.

Plus older folk mostly don’t have the worry of mortgages or very high childcare costs.

Nor does the working population with paid off mortgages and school age or adult children or who don’t have children at all. We don’t, never have and never will have a tax system that takes into account outgoings. It’s a complete red herring.

Plus 50 isn’t old!
Agree, but tell that to the many businesses who discriminate against over 50s jobseekers. It's a widely reported issue.

But also the statistics are for people over 50. They're not all 50. Some are older.

Even the ones who are only 50, it's much harder to get a first time mortgage at that age. Especially as that group of private renters (over 50s) are statistically the poorest group of private renters. Statistics also show many have been in poverty for most of their working age lives.

These are people who do or did the important but lower paid jobs, or are disabled, or are in poverty after a Shit Happens life event (divorce, domestic violence, bereavement, caring for a disabled child, illness, lone parent where the absent parent fucked off and didn't pay child support etc).

Those who rent often made a choice to rent. As my family members have. Their choice as they didn’t want house maintenance costs. Others were ok with making an effort to get a house.
Almost nobody chooses the insecurity of private renting and being at the mercy of a landlord choosing whether or not to sufficiently maintain the property, not to mention the unaffordability of private rents for people on lower incomes (and if they're pension age it's a fixed income), especially not long-term and especially not at that age.

Yes some people choose social renting. Perhaps that's what your family members have. It's secure and affordable. However there's not enough of it so some people can't access it. Also, lots of people even if they have social housing prefer to buy. Having equity in older age is very helpful.
.

It's not about not "making an effort to get a house". Lots of people can't afford it. Perhaps you'd like to turn your argument around and tell younger people who can't afford it to "just make an effort"? Doubt that would go down well.

Everyone's circumstances are different. Shit Happens life events included. And somebody has to do the important but lower paid jobs.

many older folk are in housing association houses.
That's irrelevant for the older people who didn't manage to get one or had a Shit Happens life event (divorce, domestic violence etc) that meant they had to leave it and are private renting.

The obvious issue is there's not enough social housing, and the obvious answer is more social housing. For all who need it whatever age or sized household

50 might not be old but most employers will not invest time and money in someone closer to 60, why would they, when the Govt encourages them to employ a younger migrant on a lower wage?

Ignoring peoples lived experiences doesn't make ageism go away.

If reform of the tax system is to be done, then lets start with more taxation bands? taxing earned and unearned income at the same rate? restore thresholds?

Like i and others have said, once the theoretical link between NI and Pensions is removed, then that opens the way to abolition of the state pension.

Very few chose to rent, most people rent because they don't meet the requirements of a mortgage, rent is usually more than a mortgage and most important, there is zero housing security, 2 months notice and you legally have to leave, no reason given.

Who would chose that???

Most pensioners aren't in HA properties and the rents charged are still v expensive.

Really interesting discussion on this topic and much food for thought. It got me thinking about how tax affects different people at different stages of life and this is reflected in my own family. My parents are elderly, retired at 60/65 with private and state pensions which are above their personal allowance so pay some tax, Both DH and I PAYE and a higher tax payers (just), dc1 has just started their first graduate job so will pay standard tax plus 9% student loan tax above the threshold.

Parents are financially comfortable but by no means wealthy. After household expenses they have some money left over which they spend on simple local days out and as an emergency fund. Their house and car are paid off and they both have some chronic health issues, use the NHS regularly but have also paid for private treatment when waiting list were very long. Take daily medication and don’t pay for prescriptions.

Im middle age, married, both DH and I work FT, me in the NHS and he in the private sector. We are paying a mortgage and car, have school age dcs at home but don’t receive child benefit and topped up dc1 student loan as he got the minimum amount. DC2 is due to go to university this year so will be now supporting them. Hardly ever use the NHS, on HRT which I pay for. I contribute to the NHS pension some of which I can take at 65 and the rest at 67. DH and I have a small amount leftover each month which if it’s not needed for a large unexpected bill goes into our savings account. We are financially ok but the COL and having to replace our car so it’s ULEZ compliant has meant we haven’t been able to put much in our savings account for the past couple of years.

DC1 works in an expensive city his salary is on £30,000 pa. After paying rent, food, shared bills, transport he has very little leftover which he keeps as an emergency fund. He has no savings but pays into his company’s pension fund. Even with gradual pay increases he will be needing help from us to raise a deposit if he wants to buy his own property.

All 3 of our households pay tax in varying amounts but I don’t think any of us can sustain further increases as we would then we lose our emergency funds and tip us into a perilous state.

As it is, working people are paying NI and income tax for old age pensions and benefits for our existing population. There needs to be some understanding that it’s a step too far.

I can understand, I think, why some people feel like this. I'd like them to give some thought to the opposite view: working people have always paid tax for the benefit of the older population. The current older population did this in their time. Now they have worked and paid for others all their lives, they feel that it's their turn to benefit. There needs to be some understanding that this is a perfectly normal and reasonable thing to expect.

Unfortunately we now seem to be in a position where the current model is unsustainable, but we all need to understand and respect the position of both sides in order to work out a way forward. Blanket statements that 'the other side needs to understand our position' don't help, and actually get in the way.