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?

So because an elderly couple have one decent set of clothes each, no car and have an evening out at an art gallery, you want to tax them more, because it's 'not fair'.

Listen to yourself! I'm ashamed of you and I haven't even met you.

You said equity isn’t meaningless.

Those without equity probably think it’s very very meaningful.

I totally think the state pension should be a means tested benefit rather than given to people who have huge final salary pensions and mortgage free houses.

I’ll pay 50 years of NI but the system is heading towards bankruptcy (plus ageing population) so I won’t get anywhere near as generous a state pension, if any.

”but they’re asset rich and cash poor” sell the assets then! Not rocket science.

The NI system should just be social security - a safety net if things go wrong. Healthcare, benefits, and a pension if you didn’t save for a decent private one.

You do not know what their circumstances were. Maybe it was a gift or they had had their clothes for years. Pensioners have paid taxes all their lives and give a lot back to the economy in retirement. Plus a lot volunteer for charities and National Trust type places. Google Grey Economy. Leave them alone.

@ArseInTheCoOpWindow you agree with me, great!

Getting old is awful, quite honestly. All older people have things wrong with them, as their body ages. Currently we can’t get GP appointments when we’re sick. I’ve just paid over £11,000 for an operation for a condition that was debilitating. There’s a two year wait just to see a consultant.

Do not be fooled into thinking that being old is a breeze where you get to spend loads of money on the high life.

Having equity is a positive!

And if you have it there are ways of tapping into it

Ha ha ha ha ha ha ha.
You aren't listening anyway.
MN quite rightly doesn't allow abuse, if you see any report it.
I haven't been abusive.

I think this is the issue really; the government have been indicating that we should all have private pensions for a rather long time. That is clearly to shift the burden away from the state pension which is relatively small by itself, but it is paying for the numbers of people entering old age that is the issue. I don’t expect it to survive in its triple lock form; government policy is designed to push responsibility onto the individual. People really should plan for that outcome, irrespective of who wins next time.

The Triple Lock was an opportunist political move designed to embarrass Labour after the 75p rise under Gordon Brown as chancellor. Now it's going to be hard to shift, not least because we have an aging population and they are typically more motivated to vote.

But why did Gordon Brown introduce his link to prices for pensions rises?

Enter one M Thatcher. She decided that the previous system linking state pensions and benefits to average earnings, had to go and would be replaced by her government deciding when she thought the pensioners and the rest could have any increase. Some papers released show that she was even considering cutting pensions in 1980.

@OP how if I gave a ridiculously similar example? I see the young women from the social housing walk by every morning with their ever growing number of kids to take them to nursery and school. I see them sloping back afterwards and standing gassing and smoking on the corner. They don't work yet they seem to continue to churn out babies. Some of them are so lazy they won't walk to the other end of the village to get the free food from the Church and Tesco. Would that be a valid case to use to talk about taxes, benefits etc? Why should I as a pensioner pay more to subsidise their lazy arses and life choices?

The thing is if you start means testing state pensions what incentive is there for people to pay for occupational pensions? And at what point do you start to means test? Which generation is going to be the first to take the hit of having the social contract broken?

Which age group would you expect to be the largest user of the NHS?

And which age group do you think has already paid the most into the NHS?

Edited to add: please expand the quote or this post won't make much sense.

There seem to a few people on here with strong opinions based on completely incorrect understanding of the tax system.

@blossomtoes is right, and what's more, pension income is not tax free. It's not taxed at source, that's all. It counts towards overall income in the same way as any other income, and once the tax free limit is reached, tax is due. The tax is normally collected by deduction at source from non pension income just because it's easier for the government.

An example using made up figures: if you have 2000 pension and 4000 other income you have total income of 6000. If the personal allowance is 1000 and the tax rate is 20% then your tax liability would be 5000 at 20%, ie 1000. This would be taken off the 4000 other income before you got it, so you'd get 3000 other income and 2000 pension. This doesn't mean your pension is tax free. It would be equally incorrect to say that your other income is being taxed at 25% as you're getting 3000 instead of 4000.

Pensioners will very likely have paid tax and NI all their lives. Many will have worked since they were 15/16 because fewer people went to 6th form/ university in those age groups. Female pensioners generally have much lower pensions due to time spent as a SAHM, part time work and a lower level of education than males. Many women were made to leave work at marriage and certainly after becoming mothers.

*@mycatsmudge

'*The well heeled couple probably in their 60s was expensively dressed and groomed. Being able to arrived in a black cab indicates a healthy level of disposable income, they literally waltzed into the foyer so not needing a taxi due to disabilities.'

If you're going to try to back up your attack on pensioners with silly statements like this, it's probably a good idea to use language correctly - unless the 'well-heeled couple' did actually perform a dance as they entered the building 😄

You might want to look up the meaning of 'literally'.

And since when does anyone have to have a disability to take a taxi?

Also a stupidity tax on people who literally don't know what literally means.

Haha I'm literally going to waltz in to Tesco's when I next go. In fact I might start waltzing everywhere.

The thing is that back in Thatcher's day, the government were trying to encourage workers to make their own pension provision outside the basic state pension, i.e. SERPS then S2P, plus contracting out etc. The clear intention was that current workers (back then) should take responsibility for themselves and not to rely on basic state pension. Unfortunately, subsequent governments scrapped all that and removed contracting out, S2P etc., so we reverted back to people relying on basic state pension! That's the problem with trying to plan for the longer term when Parliamentary terms are 5 years or less - it's simply impossible to plan for things in 20-30 years time as you can't commit future governments to your plans. Of course, now with statutory workplace pensions, we're trying to do the same again, i.e. encourage people to take responsibility and pay towards their own pensions, but almost certainly, a future government will come along and dismantle that too!

Really not sure why the tax people have paid at some point in the past matters at all. Tax is paid on today's income and today's gains. If someone, today, has an income of, say, £50k from whatever sources, they should pay the same taxes as a worker with an income of £50k. There's no justification at all for different taxes, tax rates, etc dependant upon age.

It's like saying someone shouldn't pay VAT on a new car they bought today, because they'd already paid VAT on a new car they bought ten years ago.

Between 2012 and 2018 employers had to to enrol all employees into private pension schemes. It started in 2012 with large employers and then smaller businesses up to 2018.

Prior to this many private employers did not have to pay into a pension, so many people were basically on their own. (management charges at 2% when you are having to pay those yourself plus any extra to actually pay into your pension made it an expensive business if your employer wasn’t paying anything on your behalf)

So for those that have been enrolled since it was a requirement ie between 2012 and 2018, it’s safe to say they could have a reasonable private pension. I wouldn’t, therefore, be surprised if pensions for all from the state became a thing of the past for those reaching pension age in 2052/2058.

You start with those with the highest incomes first. Say over £100k which will be a tiny number of pensioners. Then bring it down over, say, four years, to the same £60k as child benefit claw back, which will hit more people, but still a minority of pensioners.

I'd use the old Pareto principle and aim for, say, 80% of pensioners to be untouched and free to claim all pensioner benefits such as state pensions, and for only the remaining 20% to be hit by claw back, with probably only 5% (or less) losing all their state pension and other pensioner benefits.

So what about people like our PM who pay an overall rate of around 25% on their income now - why shouldn't they pay the same overall rate as someone earning, say £50k?
Or put simply - why do I pay income taxes at a much higher rate than Rishi and his wife?