What do you consider a low income in retirement?

This isn't the tax thread. What happened?

Let me try and get it back on track. If I said that I think, say, anything under £15,000 would be a low income can you work out how you feel (higher or lower). I would hope that the personal allowance was put up to that when everyone shouts about the freeze on it.

I can offer an alternative and would have been more inclined to say £12,500 before the cost of living debacle.

Doodledog With your tax structure, who would replace workers who work 70-80 hours a week to provide for their family? My husband didn't work long hard hours, nor did I doing it all alone at home during his hours - for others who choose 20-30 hrs a week.

FTR, I haven't worked outside my home, but he's paid much more than 2 shares of tax and NI - because I did everything home related.

Callistemon I so agree with you, I have been advocating for years that all the bells and whistles should be rolled into the basic pension. It would save a fortune in adminstrative costs.

I would even roll in the cost of Prescription season tickets so that we pay for our prescriptions like everyone else.

So, Doodledog, if I as a high earning lawyer decided to take myself off to Jersey to escape your punitive taxes, which would have been an entirely feasible move when I was working, you would get an immigrant to take my place? I don’t think so. Similarly if I were a CEO or other high earner. People who work 70 hour weeks and earn big salaries don’t do so in order to enable those who decide not to get a more demanding and better paid job because it’s not all about money. They do so for themselves and their families. I would certainly not have worked in your Utopia. I would have taken my talents and money elsewhere without a shadow of a doubt.

Whilst I am not specifying a certain amount because living expenses will vary even from region to region, I do think that the various add-ons to the State Pension should be incorporated into it as a starting point.

These allowances and 'perks' which are given on top of the SP can be taken away at any point, as was the 'free' TV licence.

The Winter Fuel Allowance, the £10 Christmas bonus and the ludicrous 25p per week for over-80s should all be rolled into the State Pension.

There are so many anomalies with the amount of the SP too, as rules are changed by successive f0governments, that is all has become a complicated, inefficient mess.

There is no figure that is "fair" to all. If you gave everyone £20000 a year at the end of that time some would be in debt and some will have saved. Some people are good at budgeting and looking after their money, some are not. We are all different. I am by nature a saver, my sister a spender. No amount of money would have been enough for her.

karmalady

If based on tax then there is the encouragement to have a more idealistic working lifestyle of perhaps 3 day weeks. Pay less tax, get more pension

Yes, that's the issue with doctors, isn't it? Still, there's a few billion pounds available for that. Think how far that would go in breakfast clubs and textbooks.

Not enough people have millions in the bank to make a difference if they get child benefit. That would mean 'unnecessary' payments of a tiny amount in comparison with the better living standards it would mean for lower earners. High earners would still be better off (than lower earners) and with less to spend their money on they would still have a lot of disposable income for non-essentials.

I didn't mention squeaking pips. I also think that the motivation for getting 'better' jobs is not all about pay, and what keeps people in the UK is about more than pay too. Some people would emigrate, but they always do, and we would quickly get immigrants to do the things they did, particularly if we offered a good standard of living and a happier population.

I dislike means testing for numerous (well-documented) reasons, but I pay tax, as does my husband, which is fair, as we both use the services it pays for. As you say, grannysyb, the rise in the state pension (Mr Dog gets it, but I am not yet eligible) will be swallowed up in council tax, fiscal drag and income tax before we start on the cost of living increases. It's annoying, but it's fair.

If based on tax then there is the encouragement to have a more idealistic working lifestyle of perhaps 3 day weeks. Pay less tax, get more pension

Norah

That chart of 3 incomes is ridiculous. The numbers are quite off.

I've seen it before. Who on £37,300 can afford a new kitchen and bathroom every 10/15 years? A kitchen and bath alone take the entire £37,300.

For me, their moderate would be my comfortable.

Means testing is a waste of time, we have a couple of private pensions and bills, so pay tax when our incomes go above a certain level, which I think is fair. We live in a nice area, and now our council tax has just gone up to over £3000 a year for a two bedroom cottage, so although the state pension has gone up, it will affect our leisure spending.

This, indeed this. "... tax them until the pips squeak to give more to someone who perhaps CBA to get a better job? It wouldn’t be a fairer and better society because the high earners would be extremely resentful and probably emigrate."

So you would give benefits to high earners without means testing (child benefit, unemployment benefit if between jobs despite having millions in the bank etc) but tax them until the pips squeak to give more to someone who perhaps CBA to get a better job? It wouldn’t be a fairer and better society because the high earners would be extremely resentful and probably emigrate. I know I would. Crime would not end because you would still have the underbelly of society who would rather thieve - and worse - than do an honest day’s work.

Doodledog What you’re really talking about is taxing those on higher incomes at a much higher rate.

I am, yes. Which I think is fair. I wouldn't means test anything though, so any benefits (whether they are called that or not) would be universal, and they would get them too.

Unfair on so many levels, why would people work hard to get ahead instead of putting in a minimum (35 hr) week?

That chart of 3 incomes is ridiculous. The numbers are quite off.

I've seen it before. Who on £37,300 can afford a new kitchen and bathroom every 10/15 years? A kitchen and bath alone take the entire £37,300.

What you’re really talking about is taxing those on higher incomes at a much higher rate.

I am, yes. Which I think is fair. I wouldn't means test anything though, so any benefits (whether they are called that or not) would be universal, and they would get them too.

The point would be that everyone would be able to live free of worry about homelessness, hunger and want (weren't they three scourges as identified by a Victorian?), so crime would reduce, and everyone would be less likely to be a victim, families would have a better chance of staying together and IMO it would be a fairer and pleasanter society.

If everyone is paying more tax, I really don’t understand how those just making ends meet would manage without resorting to benefits. What you’re really talking about is taxing those on higher incomes at a much higher rate.

Doodledog

Oh yes, I would have a tax free allowance. The pension now is the same - if you qualify, it doesn't take account of how much tax (or NI) you have paid - it is a fixed amount. IMO, that's fair, and you should be able to provide for yourself on top of that without penalty (although I would put a limit on the amount of contributions that could be tax free).

The difference between my world and now would be that the amount of tax would be higher, the bands would kick in earlier and be more staggered (basically everyone would pay more) but in return there would be a more equal and humane society, and people wouldn't have to worry about their basic needs being met.

I think I understand after you've had to explain again.

In my world, the more one pays the more one receives, after the initial amount. I find the current provisions wrong regarding how much paid in compared to what one receives. No need for the payout to stay equal/fixed.

Also no need for limits on tax free contributions.

I believe we think totally differently. All interesting to me.

As a retiree brought about by redundancy I'm not due my state pension until 2027 but do have a couple of work pensions to live on. So with DHs pensions and ESA we are just about managing. DH is due his state pension in December so income should increase a bit then.
In the meantime I worked out with the 10.1% increases due on my work pensions that I will now have to pay tax due to the fiscal drag, not sure yet if NI will be affected - not sat down with a calculator yet to work that out or did they cancel that?

Germanshepherdsmum

So people who are just above the tax threshold should pay more tax if ‘everyone’ has to? That’s more people on benefits at a stroke.

I would have staff to sort out the minutae

The answer to that would be no, though. It would be on a sliding scale, and there should be no need for benefits, other than for people unable to work, and they would be higher than now, as there would be more in the pot.

People wouldn't need to pay for things like dentistry or private medicine/education if we could all get good service paid out of taxes, so in the end people would have as much after tax spending power as before. Or enough, anyway. I'm not in favour of everyone earning the same, or of removing take-home pay differentials, but I do think that society could be a lot fairer than now, if everyone paid in more.

Here is the answer to the query. www.retirementlivingstandards.org.uk. It discusses three retirement income levels, low, medium and high (not millionaires) and discusses what standard of living that goes with.

Obviously not everyone would think that the life style it shows would be theirs. We all spend our money in very different ways. For some people holidays are improtant , for others on the sme income they are not, so lets not get bogged down in minutiae, but as a broad brush approach to retirement living and what three different incomes could cover, it is very interesting

Oh yes, I would have a tax free allowance. The pension now is the same - if you qualify, it doesn't take account of how much tax (or NI) you have paid - it is a fixed amount. IMO, that's fair, and you should be able to provide for yourself on top of that without penalty (although I would put a limit on the amount of contributions that could be tax free).

The difference between my world and now would be that the amount of tax would be higher, the bands would kick in earlier and be more staggered (basically everyone would pay more) but in return there would be a more equal and humane society, and people wouldn't have to worry about their basic needs being met.

So people who are just above the tax threshold should pay more tax if ‘everyone’ has to? That’s more people on benefits at a stroke.

Doodledog

Because that's how tax works. If you earn a lot you pay more than someone who earns less, but you both use the roads, schools, hospitals etc, and you both get the same pension.

If I ruled the world () everyone would pay more tax so that everyone who'd paid in got a decent pension, and everyone would have somewhere decent to live, medical treatment etc.

I believe I'm confused.

Taxes work, currently, by collecting on earnings. And IMO, there should be a lower limit below which no tax is collected, and that happens now. All tax collected should be at the same rate, not variable, imo.

But you lose me on the pension payout bit - why the same?

No, I mean everyone. I think a high tax society which looks after all its citizens is a good thing. The strong should look after the weak, but everyone should contribute to the collective pot.

From each according to ability, to each according to need.