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?

Historically, pensioners were generally worse off financially than workers, so higher tax allowances and other tax perks were justifiable.

The point now is that many pensioners enjoy higher incomes than workers, so the opposite should be true, i.e. tax perks for workers and if not higher taxes, at least equality, between workers and pensioners.

Historically, few pensioners would have had other lucrative income streams such as buy to let rental incomes, dividends from investment portfolios, gold plate pension schemes, etc.

It's entirely reasonable for richer pensioners to pay at least the same amount of tax on their income as workers, i.e. a pensioner with £50k income should pay the same tax as a workers with a £50k salary. Whether that is achieved by expanding the scope of NIC to all income, or by scrapping it and raising income tax instead is up to the statisticians/economists/politicians to decide.

Also, when current pensioners were working there were fewer pensioners for them to support. How on earth do we provide social and health care for the elderly with relatively so few workers to support them if we pay triple locked pensions? Is it taken from their estate? Someone needs to pay for it. Care home owners seem to be profiteering too I feel, but no one seems to have the will to do anything about this either.

@DramaLlamaBangBang and @Badbadbunny Maybe I didn't make my point clearly enough, because these replies miss it completely. They just restate and explain the your own positions. I was hoping for some attempt to understand and acknowledge that the opposite view was also legitimate and understandable. Without that it's one sided and I don't think there's any moving forwards.

but no one seems to have the will to do anything about this either.

Because the current situation has been foreseeable for decades. The time to “do something about it” was 50 years ago when today’s retirees started work but successive governments have blithely ignored it. No government with an atom of political nouse is going to spring a new 8% tax on a large proportion of the population which is the age group most likely to vote, it would be suicide. Gen X is coming up to retirement now and they’re hardly likely to vote for it either.

@MontyDonsBlueScarf I don’t agree with you though. The other arguments are stronger.

Only because they’re yours. The arguments on both sides are equally valid.

I'm not expecting you to agree, just to acknowledge that your view that the other arguments are stronger is a belief and not an immutable fact.

How on earth do we provide social and health care for the elderly with relatively so few workers to support them

There's more people on jobseekers benefits than there are total job vacancies in the UK.

So there's less jobs available than people looking for work

Oh, and life expectancy is no longer increasing (and I understand it's actually started to fall).

Incidentally, there are more Gen X and millennials than boomers so hopefully Gens Z and Alpha have a bit more generosity of spirit than their parents.

I'd say for all the age groups, the generosity of spirit or lack of it, is the same as the financial circumstances of each generation. Varied.

Some people (whatever their age) seem incapable of realising that their own life experience isn't necessarily representative of everyone else in the same age group as them.

Equally applies to any other generalisation. Not just age.

That never used to be the case. In all the years I worked I never heard anyone complain about paying for previous generations’ pensions. We just accepted that was the deal and ours would be paid when the time came.

The "doing something about it" would have meant you paying more tax when you were of working age to reduce government borrowings and maybe start to build up some reserves to pay for your own pensions and other benefits in old age. Would you have voted for that?

Or maybe, given you think it was obvious what was going to happen, you should have made more provision for yourself, i.e. shovelled more into private pension schemes or saved/invested in other ways?

Or maybe, given you think it was obvious what was going to happen, you should have made more provision for yourself

I did.

And, by the way, @taxguru, the basic rate of income tax was 33% when I started work with 9% NI on top - that’s what we paid so our grandparents could have pensions.

What was VAT back then? Maybe 8.5%.

There were no student loan repayments. No insurance premium tax. Probably lower rates of petroleum duty and tobacco and alcohol taxation, no sugary drinks tax. No landfill taxes. No air passenger duty. Lower council tax (rates). Easier free parking. Lower public transport fares, especially trains.

You really can't just pick out one or two random tax rates and ignore all the other changes.

As per economists and statisticians, today's overall tax burden is the highest it's ever been in living memory.

You really can't just pick out one or two random tax rates and ignore all the other changes

I didn’t. You’re quoting a whole raft of discretionary taxes and including charges that aren’t taxes at all. The unavoidable working taxes for the purposes of comparison are income tax and NI which combined were 42% as opposed to 28% now.

There were no student loan repayments.
Only a small percentage of people went to university.

Probably lower rates of petroleum duty and tobacco and alcohol taxation, no sugary drinks tax.
Well I guess cheaper fags, booze, and sugary drinks might be one way of solving the "too many old people getting pensions" issue. Die young of a massive heart attack. Then younger generations won't have "the burden of an older population"...

No air passenger duty.
Less people went abroad for holidays in the past.

I agree the rates system sounds fairer than council tax though but older generations were affected by the change too. It's not a recent change. It happened over 30 years ago.

Maybe we need to look at what we do spend money on? before thinking about getting rid of pensions.

HS2 now that really is money down the drain, we are a small country, we don't need it, then there is Trident, a weapons system that will cost us £200 billion to replace and one that we will never use, if it even works.
France aside, no one else in Europe has a nuclear deterrent, why do we?

Nuclear deterrent? Someone has to!

It’s all very well to say no one complained about paying for benefits years ago but the benefits are now going to substantially more people and for many, wages have stagnated and all unavoidable costs have gone up. It’s inevitable many will see higher taxes as unaffordable. Younger families do have more expense. Many women years ago didn’t work fill
time. No need. We cannot squeeze a quart out of a pint pot and the numbers becoming old will grow and grow. They are going to have a take greater fiscal responsibility for their future.

@taxguru the UK standard VAT rate has never been 8.5 per cent. It was introduced in 1974 at 10 per cent, as part of the deal when the UK joined the Common Market. It replaced Purchase Tax which was payable on different things at different rates, but could be as much as 33 per cent or even more. I'm surprised that a tax guru isn't aware of this.

In 1974 I was 23 and working. Most of my generation had been working and contributing since they were 15. That is many, many years of contributions even if you were lucky enough to retire at 60. All on the understanding that we were paying for others, and one day it would be our turn.

How would you feel if you'd been patiently standing in a queue for hours and when you finally got to the front, people from behind pushed in and justified it by saying 'we don't do queuing any more, you should have realised that was going to happen and made other plans.' That's how a lot of us feel. We recognise that the current system may not be sustainable but at the same time we'd like our feelings to be recognised and understood, not dismissed out of hand.

I am open to discussion of various solutions but for a solution to be sustainable it needs to be reached by consensus with respect for both sides, not on the basis of assertions that it's one generation's fault and they'll just have to suck it up.

Many women years ago didn’t work fill time. No need

That has nothing to do with it. Only women with a partner had the luxury of not working full time. I most certainly did and so did my friends. And paid over 40% combined tax on our earnings. It’s very tedious having all this obfuscation and red herrings thrown in.

Many married women didn’t work or worked part time! It’s not obfuscating! It’s true. Very few used child care or Nanny’s. They didn’t need to as DHs earned enough. Obviously single women worked. Of course they did but they were a minority, as these were the days of 2.4 children. It’s important to understand the differences in earnings and buying power. Many couples had greater purchasing power than now. I accept Labour had swingeing taxes and look where it got us? Rock bottom.

Has it deterred Russia attacking Ukraine?

Anyway the point is, the Uk has the money, it just has a very unequal tax system, millionaires pay 20% on millions of unearned income, meanwhile workers pay far more.

Plus what would happen to employer contributions?

Many women years ago didn’t work fill time. No need

I worked full time since l graduated from university in 1986.

Through single parent hood and married life. Only dropped to 4 days in 2005 when Dd was born.

I could not afford part time for the majority of my life.

Slight typo, there was a five year or so period when the basic VAT rate was 8%, reduced from 10% but then increased to 15%.