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?

There’s no reason that age alone means people should pay less tax on their income. Or that people should pay less tax on income because it’s not earned by working. Imo ni should be merged into income tax

The cash equivalent is a pointless comparison unless you take inflation into account. The percentage is much more meaningful. As you have said yourself the threshold has always been low - my first full time job paid £10 a week.

When you are looking at the whole debate of people taking more out of the system then they paid in I think the cash equivalent is relative. I know those first 5 years of my working life I didn’t pay much in as I said even allowing for inflation but I still get my full stamp for those years.

Less than the current generation. Boomers have a large net deficit- about 400k or so net deficit that the current working age population are paying for. It’s unfair.

£10 a week in 72 is £114 a week now which I don’t think would earn you a NI credit now?

Only if you take inflation into account. My £10 wage in 1972 is worth £134 now. Imagine trying to live on that - and I still paid NI and tax.

NI contributions or “stamp” have no relevance to actual funding of pension or other contribution based benefits. They are just taxes taken into the treasury on that year. They do not provide a pot of money nor are they in any way calculated to meet the cost of state pensions.

@User2460177 I know there is no pot but in these debates people often say they paid their way/earned it etc

But you’re not paying equal taxes now despite having paid less into the system in the past. That’s what we are saying is unfair.

Only if you take inflation into account. My £10 wage in 1972 is worth £134 now. Imagine trying to live on that - and I still paid NI and tax.

I used the BOE inflation calculator which says £114 but only goes up to April 24.

I know. I agree- I was just making the point that there is no link. You’re right though- the amount paid by most people in NI goes nowhere near funding their state pension.

Which is what I perhaps badly was trying to say by using myself as an example

Contributions to a pension scheme! Obviously not including state pension as there are no contributions in that way.

Oh, ok I dont have any of that.

Nail on the head.

I didn’t pay less into the system in the past. I didn’t earn peanuts all my life! I was a higher tax payer for over 20 years. NI is a tax on earnings and it’s a tax which is tied to entitlement for pensions and other benefits. It’s nonsensical to suggest that a cohort with no earnings and who are receiving the benefit to which it’s tied should continue paying it.

By all means tax wealth. Raise capital gains tax, create a wealth tax based on property values. Raise more money from wealthy pensioners but don’t come up with some nonsensical idea of “fairness” which would impact most on the poorest pensioners.

Incidentally NI reduces to 2% for higher rate tax payers - where’s the fairness in that?

NI should be abolished and we should have one income tax.

I’m just off to work so will check on this thread later

So how would you then determine entitlement to state pension and JSA? Particularly for non earners like SAHPs and carers?

It’s nonsensical to suggest that a cohort with no earnings and who are receiving the benefit to which it’s tied should continue paying it.

My aunt is 68 and still working, earns 98k. She thinks it’s wrong she doesn’t pay NI & the finance dept at her work had to get firm with her as she was refusing to bring her passport in 😆

The "poorest" pensioners wouldn't have income sources over the NIC threshold, and even if they did breach the threshold by a small amount, the NIC is only on that excess.

NIC threshold is £12.5k "per income source", i.e. if you have two part time jobs each earning £12k, you pay no NIC. Exactly the same could be applied to pensions, i.e. someone with state pension of £12k and occupational pension of £12k would pay no NIC. Someone with higher income, i.e. £25+plus can afford to pay a few percent NIC on the excess.

We already have a system of "credits" for low earners, i.e. part time staff earning under £12k, or carers, or unemployed, etc., who get "credits" counting towards state pensions without paying any NIC. The system is already there. There's no link between actually "paying" NICs and state benefits!

if you have two part time jobs each earning £12k, you pay no NIC.

That would be a good loophole to close, wouldn’t it?

Exactly. How would those credits work if NI was abolished?

So how would you then determine entitlement to state pension and JSA
Particularly for non earners like SAHPs and carers?

There would have to be another measure. From a tax perspective NI is outdated, it doesn’t do what people think it does eg go into a separate special pot. It doesn’t get saved for later pensions costs. It doesn’t target people who get income from other sources eg dividends. You can have 3 jobs but won’t pay NI on the total income of those jobs. A more simplified tax system would be much better.