Triple Lock

[JagLover]

Evanivitch said:

So would you then remove the income tax applied when receiving pension? Otherwise you end up in a position of being taxed on both ends, which would be a huge disincentive to save via the pensions mechanism, which ultimately provides the government with some assurance that people will be able to provide for themselves in retirement.
.

It often gets higher rate relief when saved and then is taxed at the basic rate when it comes out.

That is why many campaign to restrict tax relief to the basic rate band. There would be be billions to fund the basic state pension if needed.

[alfaspecial]

Evanivitch said:

alfaspecial said:

For the record tax relief (and NI relief) on pensions costs the state £40 bn pa (£21.2 tax, £19bn NI),
source https://www.ftadviser.com/pensions/2019/10/10/cost...
If that tax and NI relief was NOT given then the 'take' from NI contributions would go up from £150bn pa to £190bn pa ie over 1/3
And a decent pension would be possibly affordable. (2019 £95bn https://www.ftadviser.com/pensions/2019/10/16/stat... ) NI pays for things other than just pensions)

So would you then remove the income tax applied when receiving pension? Otherwise you end up in a position of being taxed on both ends, which would be a huge disincentive to save via the pensions mechanism, which ultimately provides the government with some assurance that people will be able to provide for themselves in retirement.

Ultimately the pension should be brought into a universal income stream, with the system streamlined to provide everyone with a basic income and if further income is required to to disability or dependents then so be it.

The issue I see is that we have an perceived entitlement at retirement to be treated differently because the perception is you've paid into a state pension pot. You haven't. Let's stop differentiating people based on age alone, and actually look at their circumstances.

re "So would you then remove the income tax applied when receiving pension? "

There are other incomes streams that are double 'taxed'. Bank interest for example. You might only be getting 0.4% interest but the state, through financial repression, is 'stealing' 1.7% pa (Inflation 2.1 'best' bank interest 0.4%)


Currently, employees play both tax and NI on income. Tax on income over £12570, NI on income over £9568. (plus of course Employers NI)

As I've said previously, £9339 pa pension all other income should be taxed. No tax reliefs. If pensioners earn more than £9339 then this should be taxed at their marginal rate. If pensioners don't pay NI then why not let richer (higher income) pensioners contribute more income tax (ie tax from £9339 not £12570) to 'help' the less affluent?

You mention UBI .... I think it's an idea that might come. But I think there would be too much abuse. We can all see examples in the Daily Mail of people who abuse the benefits system (work 16 hrs to justify working tax credit, shell out a baby every 18 months etc etc)

[InitialDave]

Evanivitch said:

InitialDave said:

Nickgnome said:

Why would it be much difference from an 18-22 year old single independent person.

What is minimum wage now?

£6.56 for 18-20, £8.36 for 21 to 22, £8.91 thereafter.

So £12,792, £16,302, and £17,374.50 if working full time.

Apprenticeship £4.30 an hour age 16-18, and first year for 19+. Then minimum wage applies.

Yes, he asked for minimum wage 18-22.

[Nickgnome]

InitialDave said:

Yes, he asked for minimum wage 18-22.

I had assumed that younger people would still be loving at home.

I think it is reasonable that when someone becomes 18 or a little older they should be able to live independently.

[Evanivitch]

InitialDave said:

Evanivitch said:

InitialDave said:

Nickgnome said:

Why would it be much difference from an 18-22 year old single independent person.

What is minimum wage now?

£6.56 for 18-20, £8.36 for 21 to 22, £8.91 thereafter.

So £12,792, £16,302, and £17,374.50 if working full time.

Apprenticeship £4.30 an hour age 16-18, and first year for 19+. Then minimum wage applies.

Yes, he asked for minimum wage 18-22.

And for apprenticeships that's £4.30...

[Biggy Stardust]

NRS said:

Nickgnome said:

Many many working people exist all their lives. They have not the skills to plan their lives so saying the should have saved is naive.

What is the average wage now? £27K or so. Minimum wage say £15K. Unfortunately many in this bracket will not have been well educated.

Why would you expect people who have "existing" for their life to suddenly start "living"? I'd also hazard a guess many of those people would have regarded their life as pretty ok too. Are you not the person with homes in the UK and Taillin, and perhaps a yacht or something? Just because people don't have the same standard as you it's not like they're miserable people groveling away in the dirt.

You're a mean, cruel sarcastic bugger. Would you like to be best mates?

[Evanivitch]

alfaspecial said:

re "So would you then remove the income tax applied when receiving pension? "

There are other incomes streams that are double 'taxed'. Bank interest for example. You might only be getting 0.4% interest but the state, through financial repression, is 'stealing' 1.7% pa (Inflation 2.1 'best' bank interest 0.4%)

I'm not questioning that we do get double taxed, my point is that avoiding the tax initially is the incentive to save into a pension. Which in turn provides confidence to the government that they're not going to have millions more relying on just the basic state pension in future. It also drives investment capital into the economy. Remove that incentive and people will find other ways that benefit the government less and provide less visibility.

alfaspecial said:

You mention UBI .... I think it's an idea that might come. But I think there would be too much abuse. We can all see examples in the Daily Mail of people who abuse the benefits system (work 16 hrs to justify working tax credit, shell out a baby every 18 months etc etc)

Ultimately, having a baby isn't abusing the tax system.

The removal of the cash payment for trades etc with vastly improve the ability of the government to trace the "grey" economy and those that try to avoid their income tax liability and claim state benefit illegally.

[clockworks]

I'm 2 years away from getting my state pension. Currently in receipt of two DB company pensions, which pay just over £650 a month. Also self-employed, doing something that I could (and probably will) carry on doing for another 5 years or longer.

I've been keeping a close watch on my budget since giving up my PAYE job. Mortgage paid off, so my monthly bills are just over £400. Shopping, about £170. £50 for fuel. £400 a year for heating oil.

I can "exist" on £650 a month. In reality, I spend about £900 a month on routine things

Because I live in a semi-rural area, a car is pretty much essential. That's at least £60 a month for servicing, MOT, insurance and RFL.
Add that in, and that's the basic state pension almost gone, just to cover the bare minimum.

No money to replace things as they wear out or break, no money for hobbies or going out, no money for holidays or day trips, no money to maintain the house, or buy clothes. It would be a pretty miserable existence.
Not sure why anyone would begrudge a pensioner a few "luxuries", like a pint on Sunday, some new underwear, or a trip to the coast.


Of course, I'll be in a better position than a basic pensioner. My total income if I don't work will be about £1320 a month. I can carry on with some hobbies, maybe even afford a holiday once a year.
Plenty won't be as lucky as me though, just the basic pension, and run down any savings until they qualify for help with council tax etc.

[texaxile]

Murph7355 said:

That nice man Rishi has a nice smile though...

As well as a rather wealthy and attractive wife.

[A500leroy]

The biggest fixed household outgoing for a pensioner household must be council tax, so why not make all pensioner households exempt and then lower how much money they receive each week?

[Evanivitch]

A500leroy said:

The biggest fixed household outgoing for a pensioner household must be council tax, so why not make all pensioner households exempt and then lower how much money they receive each week?

I think we need to stop making special cases for pensioners. All it does is lead to more complicated means testing which is unnecessary burden.

[towser44]

anonymous said:

[redacted]

I'm only 39 and currently, I'll have worked 50 years by state pension age. 52 if you count the 2 years I also worked full time hours between 16 and 18 whilst at college.

[anonymous-user]

anonymous said:

[redacted]

Quite. Today’s new pensioners may be receiving a state pension for nearly as long as they have worked. It has got well out of hand. Nothing will change significantly for a long time, until at least the boomer demographic have shuffled off and the working demographic can take back political influence.

I’m 20 years away from a state pension (although the goal posts will probably keep moving further away), was told by my economics tutor at school 20 years ago that there wouldn’t be a state pension by the time I retired, so I already have a good sized private pension (no thanks to hmg closing down the contribution allowances), any state pension will be a top up for the holiday fund.

The whole point of the welfare state and taxation is to redistribute wealth fairly. Giving a state pension to everyone regardless of need does not meet those terms, and only serves to spread the money more thinly than necessary, the poor stay poor, the rich get a free holiday, car, etc each year. There is nothing fair about that. Saying it’s unworkable to means test pensioners is laughable, it’s not difficult, afterall millions of working age families have to be means tested all the time to receive any benefits, so why not the older generations?

[Nickgnome]

Biggy Stardust said:

NRS said:

Nickgnome said:

Many many working people exist all their lives. They have not the skills to plan their lives so saying the should have saved is naive.

What is the average wage now? £27K or so. Minimum wage say £15K. Unfortunately many in this bracket will not have been well educated.

Why would you expect people who have "existing" for their life to suddenly start "living"? I'd also hazard a guess many of those people would have regarded their life as pretty ok too. Are you not the person with homes in the UK and Taillin, and perhaps a yacht or something? Just because people don't have the same standard as you it's not like they're miserable people groveling away in the dirt.

You're a mean, cruel sarcastic bugger. Would you like to be best mates?

He has missed my point completely. I made no comment as to their contentment or not, just that their ability to manage their finances and long term planning for them would be difficult so expecting them to save for their retirement is very optimistic.

Should they be penalised at retirement age. I say not.

The state pension should be based on providing a reasonable standard of living for an individual and not require a multitude of other benefits to make it work.

More fortunate pensioners can and do get taxed on their increased income. If the tax gets too punitive then this will disincentivise advancement.

Edited by Nickgnome on Friday 18th June 17:03

[Nickgnome]

soofsayer said:

Quite. Today’s new pensioners may be receiving a state pension for nearly as long as they have worked. It has got well out of hand. Nothing will change significantly for a long time, until at least the boomer demographic have shuffled off and the working demographic can take back political influence.

I’m 20 years away from a state pension (although the goal posts will probably keep moving further away), was told by my economics tutor at school 20 years ago that there wouldn’t be a state pension by the time I retired, so I already have a good sized private pension (no thanks to hmg closing down the contribution allowances), any state pension will be a top up for the holiday fund.

The whole point of the welfare state and taxation is to redistribute wealth fairly. Giving a state pension to everyone regardless of need does not meet those terms, and only serves to spread the money more thinly than necessary, the poor stay poor, the rich get a free holiday, car, etc each year. There is nothing fair about that. Saying it’s unworkable to means test pensioners is laughable, it’s not difficult, afterall millions of working age families have to be means tested all the time to receive any benefits, so why not the older generations?

Means testing is iniquitous for the young and the elderly alike. It is also an amazing effective way to add to the state sector employee count with consequential burdens.

A civilised society should mandate a minimum wage which is adequate for a person to live reasonably AND save for their retirement which should be mandated also. As I've posted before at least 30years to completely change the system.

At some point the' working demographic' become the retired at which point their opinions mysteriously change.

We have a tax system which should be used claw back where necessary.

[anonymous-user]

Nickgnome said:

Means testing is iniquitous for the young and the elderly alike. It is also an amazing effective way to add to the state sector employee count with consequential burdens.

A civilised society should mandate a minimum wage which is adequate for a person to live reasonably AND save for their retirement which should be mandated also. As I've posted before at least 30years to completely change the system.

At some point the' working demographic' become the retired at which point their opinions mysteriously change.

We have a tax system which should be used claw back where necessary.

I don’t disagree with most of that, although digitised tax profiles removes a lot of the state sector employee count required (I am no fan of more public sector heads). We are already moving to fully digital tax lives with businesses following close behind. Being able to means test state pension rights based on income is no different to other benefits like child benefits which are done this way. The system already exists for millions of families where the cap of £50k excludes them from receiving CB, turning it on for pension benefits shouldn’t be hard or costly.

[Nickgnome]

towser44 said:

I'm only 39 and currently, I'll have worked 50 years by state pension age. 52 if you count the 2 years I also worked full time hours between 16 and 18 whilst at college.

I think you need 35years of contributions currently. worth a check though.

I, very foolishly, contracted out of Serps. We originally got a contribution to so do,1 or 2% i think. The governemnt then took that away after a few years. That has cost me over 3K pa although has obviously unburdened the state in that regard.

My advice would be to bung as much as you can into your own pot but also look at other investments like Isas, stretch your self property wise. There is no capital gain on your primary residence.

[Nickgnome]

soofsayer said:

I don’t disagree with most of that, although digitised tax profiles removes a lot of the state sector employee count required (I am no fan of more public sector heads). We are already moving to fully digital tax lives with businesses following close behind. Being able to means test state pension rights based on income is no different to other benefits like child benefits which are done this way. The system already exists for millions of families where the cap of £50k excludes them from receiving CB, turning it on for pension benefits shouldn’t be hard or costly.

Maybe you are correct as we are more digitised. Surely tax does this already though?

Although I was never a fan of CB even as a father, I can see now that actually with our falling berth rate we could well have a resource problem in a few years so have changed my view.

[leef44]

Nickgnome said:

Maybe you are correct as we are more digitised. Surely tax does this already though?

Although I was never a fan of CB even as a father, I can see now that actually with our falling berth rate we could well have a resource problem in a few years so have changed my view.

There is always the option of immigration, it doesn't have to be about encouraging people to have more children.

[leef44]

clockworks said:

I'm 2 years away from getting my state pension. Currently in receipt of two DB company pensions, which pay just over £650 a month. Also self-employed, doing something that I could (and probably will) carry on doing for another 5 years or longer.

I've been keeping a close watch on my budget since giving up my PAYE job. Mortgage paid off, so my monthly bills are just over £400. Shopping, about £170. £50 for fuel. £400 a year for heating oil.

I can "exist" on £650 a month. In reality, I spend about £900 a month on routine things

Because I live in a semi-rural area, a car is pretty much essential. That's at least £60 a month for servicing, MOT, insurance and RFL.
Add that in, and that's the basic state pension almost gone, just to cover the bare minimum.

No money to replace things as they wear out or break, no money for hobbies or going out, no money for holidays or day trips, no money to maintain the house, or buy clothes. It would be a pretty miserable existence.
Not sure why anyone would begrudge a pensioner a few "luxuries", like a pint on Sunday, some new underwear, or a trip to the coast.


Of course, I'll be in a better position than a basic pensioner. My total income if I don't work will be about £1320 a month. I can carry on with some hobbies, maybe even afford a holiday once a year.
Plenty won't be as lucky as me though, just the basic pension, and run down any savings until they qualify for help with council tax etc.

I agree a pensioner should be allowed a few luxuries but over a lifetime of working you would hope that people would have saved something for that.

I see the state pension as a welfare benefit. As a developed country we should expect that as a minimum everyone should have shelter, warmth and food. No one should go hungry. So I think of the state pension as a bare minimum to cover for that.

Having the bare minimum covered, people should take responsibility of their own destiny so if they want luxury on top of that then they should take it upon themselves to put something aside.