Triple lock

I'm not quite sure what I'm supposed to 'think on' about. I'm questioning the special treatment that all pensioners receive via the triple lock. In an ideal world all benefits would be more generous. As is alluded to above, it also makes sense in a Keynesian way as people with lower incomes obviously spend more of it and spend it here as opposed to saving or expensive holidays abroad and that's good for the economy. But we're now in a situation politically where we are not going to see a seismic shift to a different benefits model predicated upon higher basic incomes for those on benefits. So we have to start where we are and not where I would like us to be. There have been fundemental, conceptual changes to the whole NI system and yet pensioners keep getting special treatment why? This isn't about a race to the bottom or levelling down but about having a grown up sensible discussion about what could be done. Some people have said that its wrong that pensioners are excerpt from paying NICs on any earnings they have after reaching SPA. However for example, we could ask why is unearned income free of NICs? When the NI system was first set up there was a clear link between NI benefits and NICs - now that link has been broken as NI benefits have been drastically reduced in scope and relative value and people forced into means tested benefits. So NICs are basically just another tax and a tax on people going out to work. But can you see any government revisiting NICs - it would mean putting up the basic rate of tax ( this wouldn't impact on people with earned incomes as they wouldn't pay NICs any longer) but the better off with unearned incomes would pay more. I know this leads into a whole debate about 'punishing' savers. But basically we are now in a situation where means testing is more the norm than it ever has been and basic benefits( apart from SP) even lower and paid out for shorter periods of time. If people are happy to accept a society where a person has worked all their lives paying NICs and then is made redundant at 56 and can only get JSA for six months at £73 a week and yet think pensioners should be treated differently then I despair at the illogicality of this. And where is the morality in this? It's just the pensioner vote isn't it? As has also been said above, no one gets just the basic pension without any other help unless they have savings. And it's not true any longer that means testing is expensive - it was in the pre- online claiming days. Also attitudes to claiming means tested benefits have radically changed - there's no longer the same level of stigma there was. I think it's awful that pensioners have to rely on pension credits and other help but I also think it's dreadful that people working full time have to as well, that the redundant have to, people who are long term sick and disabled, carers. We have an utterly reprehensible benefits system so I'm trying to understand why pensioners should have special treatment. I just don't get it. And I rather think that I've 'thought on' quite a lot actually.

GG - a good point about Pension Credit not being triple locked. Have the Powers That Be found a loophole to be exploited?

And you certainly have thought on Rigby. NI etc is a minefield of further loopholes. It's all a way to keep the triple lock while taxing through the back door. At least Ms May is no longer committing to promises which will probably be broken the way Mr Cameron did.

DH along with many others was made redundant at 55 and because of ill health didn't look for work so didn't claim any benefits, but I know some who did despite having no intention of working.

GG - a good point about Pension Credit not being triple locked. Have the Powers That Be found a loophole to be exploited?
Is it a loophole or is it that state pensions are not actually a benefit even though they refer to them as that, but Pension Credit is a benefit which not all receive?

A different definition rather than using a loophole.

You may have to live on this income for 20 years, and if you have no other income, that means no holidays and limited new clothes
on a less serious note, my friend said that she never throws out any clothes, she has wardrobes full of them because when she is very old and perhaps in the retirement home, she'll never have to buy any more.

It IS a benefit Jalima whether we like it or not. Get out your annual letter re your state pension and it will call it just that. If you are eligible for Carers Allowance you will not get it if you are getting SP because they are deemed to be 'overlapping benefits'.

If it wasn't, but was a pension in its own right, each year you would be told what you had saved towards your pension and what you would be likely to get and you Pension holder could not take that away or completely change the pension as they have done.

I don't know how you would wish to view Pension Credit but - loophole or whatever but, unless they make a point of the old pension + pension credit equalling the new pension those in the position of claiming pension credit will gradually drop behind. You may think it a good thing or a bad thing but it is a fact whether you fight the fight about SP being a benefit or not.

I know they call it that GGMK2 - in fact when I first started receiving my 'benefit' I wrote a letter to the then Secretary of State for Pensions and complained about the terminology. Most people would not regard it as a 'benefit'. People seem to think that the State Pension is something that they have paid into through their NI all their working lives although in reality they do know that it is paid out of existing tax.

The fact that there are so many anomalies in the present and future pension payments, the variation in the number of years of contributions, makes it all very unequal especially if some pensioners will be falling behind in the future.

I know this is argued a lot Jalima. I have seen it on other forums too but, to be honest, the idea that we could take the argument to any government (of any flavour) makes me loose the will to live. We will not win so best to go on to the next battle - you do have to choose. I totally understand why and that people believe they have paid for their pension but it was not set up like that. The pot has always been drawn on before it was filled (if you see what I mean). I agree that it is unfair in all sorts of little and bigger ways and it is hugely unwieldy.

So, if for arguments sake we accept that what we pay is a tax and what we get is a benefit then there are two ways we can deal with the mess. Either we can give everyone the same and equal pension on retirement and tax the rich and richer pensioners to balance it or we can go to a completely means tested system where we only pay state pensions to those on lower income. As I understand it - and it does feel counterintuitive - it is cheaper to do the equal pension and tax system but people view these things politically as well as practically and will have different views because of this.

What I don't understand is why they continue to insist on calling them 'National Insurance Contributions', when as you say GGMk2, it's just a common or garden tax.

I agree Ana.

I think many people would be happy to have National Health and Care Insurance contributions (using the system of NI that exists but not stopping at SP age,) if it was ring fenced for the NHS and Care, and they would then have to admit the pension comes from the main taxes (which would no longer be paying for the NHS. We would have a set amount (percentage of GDP?)for the NHS and would have to work within that or vote to pay more.

I suppose the difference in people's minds arises because the State Pension (Benefit) is variable according to the level of contributions you have made whereas other benefits, including Pension Credit, are assessed on need.

Yes, I realise that. But also, most people assume that NI contributions are paying towards their state pensions, so don't see why the state pension should be classed as a 'benefit'.

Well, I don't either but the reply to my letter (many years ago now and which I have discarded) was quite definite that it is a 'benefit'.

But there are still ( if very few) benefits that are dependent on having made NICs such as contribution based JSA, bereavement benefits, ( although just drastically cut back by the caring government when people paid NICs for years thinking they were part of the deal) , Contributory ESA, MA. These are still called benefits and they are not means tested. So it's pretty disingenuous to say SP isn't a benefit and the others that are contribution based are. Also, what about the retired women who aren't entitled to a full pension in their own right but inherit their deceased husband's?

I think the point that was being made (I may be mistaken) is that a lot of older people believed that their National Insurance contributions were actually going into an insurance 'pot' which guaranteed them a pension according to how much they'd paid in during their working life.

I know my granddad did!

I also paid 'Graduated Pension Contributions' for a long time which entitle me to about £2.30 per week. 20 years ago when I asked for a forecast it was known as 'Graduated Pension' - now known as 'Graduated Retirement Benefit'.

Every little helps.

Yes I opted in for everything and when pension forecast said that I only had 38 years of contributions instead of 40 I paid the extra. The difference of the contribution based 'benefits' is for instance I could have moved elsewhere in Europe before Brexit and still received my State Pension. If I received Pension Credit of the same amount but had not paid contributions I couldn't. You can only claim it if you live in the UK. I also knew that as I was not working in the public sector and worked for very small company and then self employed I had no other pension...
But the main thing is the hysteria over the triple lock - basically meaning at present that pensioners will get the 2 and half per cent on their State Pension - this is £3 a week. Not exactly a Kings Ransom - especially for those too old to work and without other income. We pay one of the lowest pensions in Europe. Nothing to be proud of. And as I said earlier if you feel that £3 is too much because you have other incomes - buy someone a cup of coffee - because that's how much it is worth.

grannygranby Very interesting point about pension credit.

I do think people felt and still feel they paid for their pension Ana. I have to admit I thought we had paid for care from the cradle to the grave too - that brings hollow laughter in our household I'm afraid.

We could go back to an insurance based system I suppose but it was never just that; some benefits were always universal.

gg - hysteria? Oh very erudite! Do you know how much the JSA of £73.10 went up? All the way to £73.10 - yes, frozen so in effect a cut. Go on justify that. And you might try reading my posts - where have I said that the increase is too much? I've criticised the principal of the triple lock and said that pension credit should be more generous - what patronising claptrap about buying someone a cup of coffee- I would like a better fairer system that would give more to those without other pensions/earnings and that people like me of whom there are a goodly number, should not be cosseted by triple locks. How is get hysteria? I want to receive less so that others in greater need receive more.

And very few benefits have ever been universal - child benefit was ( but is now means tested) AA, DLA ( now PIP) - can't think of any others at the moment.

I am not up-to-date with the rules and regulations of Job Seekers' Allowance and who is entitled to it, although DD did receive it for a short while between jobs. She was living at home at the time so we were able to feed her and did not charge her rent at that time.
Surely if someone is living in rented accommodation without other support this would not be the only income they receive?

Exactly the same as with pensioners - but I was talking about the rate payable before any means tested top ups and asking why anyone thought it was fair that two contributory benefits - JSA and SP should not receive the same uprating specially as the former is so low in the first place.

Do you know how much the JSA of £73.10 went up? All the way to £73.10 - yes, frozen so in effect a cut.

This is just what the Conservatives like - setting one group against another. Just because on benefit it not good you do not need to attack those on another. We need a system that supports - for everyone Rigby.

That's exactly what I'm arguing for - we need some logical discussion. It's not logical to keep on arguing in favour of preferable treatment for pensioners - there should be logic behind the debate. We should decide what is fair in terms of updating of benefits - I'd say for starters the rate of inflation. Then all benefits should get that. Then the next debate is the level at which means tested tops up should be set at. That's much more difficult of course. But I just think it's plain wrong just to defend pensioners triple lock without looking at the wider picture and having some idea of how the system should be fairer. How would you change it GG? And it's no good going for utopia - that's why I'm suggesting better pension credit top up as the solution and the taking away of the triple lock. It's not what I think is ideal but I think it's realistic. They aren't going to triple lick other benefits are they?