State Pension

[pete75]

The Tory controlled part of the press is making a great fuss about the state pension with it's triple lock, being unaffordable. Is it? The state certainly makes a profit from mine. When I was at work my combined employee and employer NI contributions, supposedly what entitles me to a pension, were more each month than the new state pension, more paid in than is coming out. Now in receipt of state pension the government effectively pays me a negative amount - they get more back in income tax each year than they give me in pension. All my former work colleagues will be in exactly the same position when they retire, most in the next five years, as will many other people.
Even for a pensioner paying little or no income tax, the state must recover a fair bit through VAT and other sales taxes along with council tax.

Wonder if any of this is taken into account when calculating the cost of pensions.

[Nearholmer]

I don’t know, but the maths of it all must be getting increasingly dicey, because:

- the ratio of non-working pensioners to working contributors is steadily increasing;

- as the proportion of people over c60yo increases health and social care costs increase, and multiple times so as the proportion of people over c80yo increases.

Of course , affordability or otherwise isn’t the absolute that certain constituencies like to pretend, it’s a matter of choices, one of the choices being how much tax everyone wants to pay, but overall I wouldn’t like to be in charge of the public finances of this country right now: massive debts to service; low productivity causing a low tax base; decreasing proportion of people of working age; increasing number beyond working age and into ‘expensive to care for’ zone; giant backlog of infrastructure maintenance and repair; heightened threat in a military and espionage sense; everyone habituated on buying loads of imported consumer goods; a widespread Americanisation of opinion, so anti-taxation …… and that’s just to start with!

PS: the fact that many (all?) of those with ‘company pension’ or private pension in addition to state pension pay income tax is a bit of red herring, because they are almost certainly paying less income tax, and spending less on taxable purchases, than they were when working, so from a public finance point of view income has reduced, and outgoings increased.

[al_yrpal]

The triple lock will reward pensioners with an extra £18 a week next April. How about the Doctors, Nurses, Railwaymen and the Prime Minister being given the same increase....£18 a week!

Thats the way to do it!

Al

[rjb]

The UK state pension never compared well with equivalent European developed countries. We sit in the middle of the table in about 16 position. Well below countries like Spain, France, Germany, Ireland.
We need a reform of the whole pension and benefit system. Perhaps a basic uniform income system which could free up hundreds of thousand admin staff to retrain into more productive roles to boost our economy.

[Carlton green]

The state pension has similarly to a Ponzi scheme, those that pay into it are paid out by the later contributions of others. The government doesn’t actually invest pension scheme contributions into a definable pot from which returns are expected - a very long running mismanagement of finances and one that simply would not be allowed elsewhere.

The ratio of those in work to those retired makes the payments of pensions from working age tax payers more or less of a burden on the Treasury. The best way for the Treasury to proceed is to ensure that large companies and corporations neither (aggressively) avoid or (at all) evade payment of taxes, likewise for notably wealthy individuals too.

Similarly the personal tax scheme is too simple, there should be an additional tax band for higher earners, in fair exchange I would restore the personal allowance of folk who earner £100k as the marginal rate of tax to £125k is relatively punitive - let the fatter cats pay up more instead. The details are here: https://www.gov.uk/income-tax-rates/income-over-100000

[pete75]

Similarly the personal tax scheme is too simple, there should be an additional tax band for higher earners, in fair exchange I would restore the personal allowance of folk who earner £100k as the marginal rate of tax to £125k is relatively punitive - let the fatter cats pay up more instead. The details are here: https://www.gov.uk/income-tax-rates/income-over-100000

There is, a 45% rate.

[Carlton green]

Similarly the personal tax scheme is too simple, there should be an additional tax band for higher earners, in fair exchange I would restore the personal allowance of folk who earner £100k as the marginal rate of tax to £125k is relatively punitive - let the fatter cats pay up more instead. The details are here: https://www.gov.uk/income-tax-rates/income-over-100000

There is, a 45% rate.

Yes, you’re right.
45% for really high earners (over £125k) is less than they should be paying (bring back the 50% rate) and something like 60% on income above £200k wouldn’t be unreasonable - and far more socially equitable than the current arrangement.
https://www.gov.uk/income-tax-rates

[pwa]

The triple lock will reward pensioners with an extra £18 a week next April. How about the Doctors, Nurses, Railwaymen and the Prime Minister being given the same increase....£18 a week!

Thats the way to do it!

Al

Pension incomes are normally lower than working incomes, and for very good reasons. When you get to pension age you have normally bought your home, or given up on the idea of buying, and have no mortgage to feed. The kids have flown the nest, and your need to buy cars to get to work has gone. All in all, you are probably requiring less. So we all plan for our retirement income to be lower than our working income.

And if you look at the income of doctors and nurses over the last decade, they have plummeted in real terms, whilst the state pension has held its value. My son is a nurse working in intensive care for the NHS and has come to the conclusion that to pay for repairs to his house he must reduce his NHS hours and undertake much better paid private work instead. Or put up with the rain coming in....

Having said all that, as someone with the state pension age not far over the horizon, I ain't going to be voting for any party that looks like cutting its real terms value...

[PH]

The state certainly makes a profit from mine. When I was at work my combined employee and employer NI contributions, supposedly what entitles me to a pension, were more each month than the new state pension, more paid in than is coming out.

Two things, first your wealth is not typical, your income both from working and as a pensioner, is considerably higher than most have achieved. Secondly, your NI contributions have always been intended to contribute to more than your pension.
Over half of pensioners pay no income tax, they rely on the state pension. Complaining about how much tax is deducted from additional income is ludicrous, we got the tax breaks putting the money in, we pay the tax on it's withdrawal. Who wouldn't see that as reasonable?

[PH]

Similarly the personal tax scheme is too simple, there should be an additional tax band for higher earners, in fair exchange I would restore the personal allowance of folk who earner £100k as the marginal rate of tax to £125k is relatively punitive - let the fatter cats pay up more instead.

The problem is if you're wealthy enough you don't take the benefit as income and there's little or no way of the state ensuring your contribution.

[Pebble]

Pete, do you ever fancy moving north of the border, I'm sure you could go some way in reducing our £19 bn deficit. There is some good cycling up here on very quiet roads!

[Carlton green]

Similarly the personal tax scheme is too simple, there should be an additional tax band for higher earners, in fair exchange I would restore the personal allowance of folk who earner £100k as the marginal rate of tax to £125k is relatively punitive - let the fatter cats pay up more instead.

The problem is if you're wealthy enough you don't take the benefit as income and there's little or no way of the state ensuring your contribution.

True enough but the Treasury should take what gains it can, close loopholes and close means of aggressive tax avoidance and tax evasion. That our tax regulations are drawn up with the aid of people who then go on to help rich clients avoid tax is not helping matters …

[yakdiver]

To some it is a bonus, but if your on housing benefit that will be reduced, some years I have been worse off.

[francovendee]

Arguing over increases to the State Pension and whether they're justified does nothing to solve how the money needs to be raised. With an increasing number of old people and fewer workers paying it can't be funded unless we find a way to tax the rich.
It's not just the pensioners who cost a lot for their pensions but also anyone who's sick and unable to work.
You can't stop aging nor avoid I'll health.
Imagine one person still working and the rest being supported by his taxes.
The rich, especially the very rich, need to pay.
No government has the balls to go after these people. Too many of them in the House or stumping up big donations to the party.

[Stevek76]

. The government doesn’t actually invest pension scheme contributions into a definable pot from which returns are expected - a very long running mismanagement of finances and one that simply would not be allowed elsewhere.

The country is a definable pot from which returns are expected.