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Geraldine and the Granny Tax

(49 Posts)
Mamie Thu 19-Apr-12 07:45:16

Just wanted to say thank you to Geraldine for being such an excellent spokesperson for us this morning on BBC Breakfast. It really annoyed me when the man from the Intergenerational Foundation (sighs) said we should talk about it as a tax on Baby Boomers. How insulting, are we not pensioners too? How much of a "boomer" do you feel if you were a miner or a steelworker in the seventies and eighties?

glassortwo Thu 19-Apr-12 07:53:37

I missed it, but it has been report on the local news on the radio.

Gracesgran Thu 19-Apr-12 08:07:37

I agree Mamie that the man from the Intergenerational Foundation added very little to the discussion. However, I am all for simplifying our tax system and making it as tranparent as possible so I do believe this very strange allowence (it starts and stops at figures for which there is no obvious reason) has to go. Whether they could have done it differently I don't know but it was always going to be an issue. The more simplification of the system we can have the less we will be paying for it's administration which should mean we require less tax to just run the whole thing. The big problem at the moment is that all the cuts they warned us would have to happen are now actually happening and whoever is affected will squeal with the perceived pain.

Mamie Thu 19-Apr-12 09:57:07

I don't disagree Gracesgran, but I think it was done very suddenly and set against the tax cuts for the rich, it was extraordinarily thoughtless to say the least.

Greatnan Thu 19-Apr-12 09:59:12

Osborne appears to have made a dog's dinner of the budget - even his own side have come out against many of his proposals.

Gracesgran Thu 19-Apr-12 10:59:57

I can see your point about the suddeness of it Mamie but it is being phased out over quite a long period. I am not an apologist for the current government but I do think that the press goes for extremes with what they report. The "tax cuts for the rich" are on tax rates which were only brought in one month before the Labour party fought an election they must have known they might loose (I would call that just spiteful personally), it was brought in as a "temporary measure" too. So for the, what was it, thirteen years of a Labour government, the highest earners paid 40%. For the duration of this government until now they have paid 50% and they are still going to have a tax rate of 45%. To be honest I wouldn't care if it came down further as long as it was paid. I have little sympathy for those who are complaining they will not be able to offset charity giving against tax and would be very happy to see the ability to use tax loopholes (legally, I know) closed off to everyone. It would probably bring everyones tax level down in the long run and cost us a lot less in administration.

AlisonMA Thu 19-Apr-12 13:48:35

In my opinion it is just another attack on a particular group of women, the group who stayed home to bring up their children, as was the norm at the time, and by doing so now do not have enough NI contributions (39 years) to get a full pension. Now that figure has been reduced to 30 but not for those alteady retired. In 2013 they plan to bring in a minimum pension of about £150 but again, not for this group of women.

Better off pensioners will not be affected as they did not get the extra allowance anyway. The really poor pensioners won't be affected as they don't pay tax. The real losers are those women who stayed home to bring up their hildren (there were no nurseries anyway) then went back to work and provided for themselves by either saving or contributing to a pension and so now pay tax but have lost the concession their predecessors had and do not reap the benefit their younger sisters have. The forgotten women.

pensionista Thu 19-Apr-12 14:54:06

I tend to agree with Mamie, however my concerns go much deeper and are mainly concerning the number of oldies caught in the poverty trap. I was born in the 30'sm, a period of time when so many of my peer group were not able to have the advantage of contributing to a company pension.

As I am still very actively engaged in trying to help the more vulnerable pensioners, I have found huge gaps in incomes between those born before the 2WW and those in the late 40's onwards. With incredible differences in regional prosperity, mainly because of full-time employment opportunities and wage structures between blue and white collar workers.

The majority have contributed during their lifetimes to the economy and the improvements in lifestyles. Yet, through no fault of their own today they are finding themselves in very different income groups and financial circumstances. Many Mums prior and straight after the war did not go out to work, their main task was bringing up their children and providing the family with good hot home prepared meals and attending to the manual washing and house work. That very different way of life as meant that many pensioners and particularly females are not eligible today for the full basic pension. Link those smaller pensions to the inflation spiral and the alteration Maggie introduced to state pension and every year the gaps get wider. I am bitterly disappointed that once again the Treasury have done little to take those older pensioners out of their poverty traps. A decent increase in pension credit would have helped as would lifting the PC threshold, as a decent society we need to be more compassionate towards those in need rather than those more fortunate that have have had better opportunities in life.

Sorry ladies if this Male old codger is ranting on, but I do wish we would as a Nation recognise the hard life of so many who were born in the 20's to 40's and have had to overcome such hardships. We should try to give them all a decent quality of life, unfortunately they are now fast becoming the forgotten minority and so many are living well below the poverty trap. The Granny tax might not affect them in the same way as you and I but we should not ignore their needs.

As a mere male pensionista living in the South West, which has the highest pension poverty stats of any region, Mainly due to it being based mainly on agriculture and tourist employment. I do wish our politicians realised that regional employment opportunities or lack of them can also deeply effect you much later in life.

Gracesgran Thu 19-Apr-12 15:14:04

You certainly know your subject Pensionista but I don't think the freezing of the tax allowance will actually affect the poorest pensioners. I quite liked the idea the Lib Dems (I think it was them) of a citizens pension. As far as I can see you would get a basic pension because you are a citizen not on contributions. I am not at all sure about increasing the pension credit. I don't mean I don't want people to have enough pension to live on but I think we should start absorbing people who haven't paid enough contributions into the normal basic pension. It could probably be only done slowly but I would love to know if it was possible. Do people still retire today without enough contributions for at least the basic pension? As there is no married women's stamp I would have thought it was less likely. If people are unemployed during their careers doesn't their stamp get credited? It seems to me that the whole pension system is a minefield and simplifying it, ensuring those at the very bottom get what they need to live on would surely help.

AlisonMA Thu 19-Apr-12 15:22:07

Gracegran, that is the plan that everyone will get a set amount providing they have 30 years contributions, it will be about £150 a week and will do away with Pension Credit in a most cases. BUT THIS IS NOT GOING TO BE RETROSPECTIVE! It will only be for those who retire in the future.

Nowadays people get NI credits for periods of unemployment or for staying home to look after their children so they should be OK. My point is that in the past pensioners got the concessionary additional tax allowance and in the future they will be protected but the forgotten group lose out on both counts.

Gracesgran Thu 19-Apr-12 15:42:25

Don't you think they will start to absorb the people not getting the new amount AlisonMA. I bet you that when they bring it in (I thought it was £140 by the way) the basic pension will be about that amount and, if you have a full pension you will be able to opt in. They would then be able to transfer people with less than the full amount. The worst off will probably be in the most elderly group and that group will be getting smaller so it will be easier to absorb.

I am being very thick I know but I don't see where the tax allowance comes in as it only goes to people who getting over the tax threshold so not the very poorest pensioners. I am not 65 so I will not get it should I have had sufficient income at 65 but those who are getting it will continue to do so albeit at a frozen rate. The basic tax allowance is going up very rapidly and, although that was a Lib Dem policy it seems the Conservatives see merit in this. I imagine that the basic tax allowance will be equal to the tax allowance for the over 75 tax allowance within a very few years. I really can't see why someone of 65 or 75 should get a higher tax allowance than someone younger.

Anagram Thu 19-Apr-12 15:51:52

If you are very thick, Gracesnan then so am I. I don't see why someone of 65 or 75 should have a higher tax allowance, and in particular I don't see how it would benefit the group of women Alison is talking about. It would only apply if your pension, earnings or both came to more than the basic tax allowance threshold.

AlisonMA Thu 19-Apr-12 15:52:47

They have very clearly stated on several occassions that it will only be those who retire in the future who will get the projected £150 and not those already retired. That is why I say it is unfair that some women stayed at home to look after their children and did not get credits for doing so and had to accummulate 39 years of contributions to get a full pension. Those retiring now and in the future got credits for staying at home with their children and only have to accummulate 30 years pension. How is this fair? At least the small amount of addiional tax allowance helped this group who gave up their careers to look after their children and often looked after elderly relatives as well. Does anyone care about them? I don't think so.

This is not about me, I get 93% of my pension and have saved very hard all my life so don't have a bad retirement but this is not the case for many people I know and no one seems to know or care about them.

Anagram Thu 19-Apr-12 16:00:16

I'm sorry, Alison, but I still don't see how the additional tax allowance would help that group of women. Their total income would have to be quite high for them to get any benefit at all, and you seem to be implying that they would only be on the basic state pension. So they wouldn't gain at all by an additional tax allowance.

wownutter Thu 19-Apr-12 16:17:28

As a result of seeing the broadcast on the BBC, I have joined Gransnet - having known nothing about it before hand. Yes I have also missed out, and am still paying tax on what little income I have. My son is aware of how difficult it was for me to save to a pension, then to see the small income this gives me plus state benefit, with about £400/yr tax taken. Private income is about £80/month. My son is so disgusted that he has no qualms about not making any effort on his own behalf. He is separated with two young children trying to make ends meet on £15,00/year. I wonder if the government have thought of this affect? I am sure my son is not the only one in his position, or with his views.

AlisonMA Thu 19-Apr-12 16:17:59

No Anagram, a lot of women went back to work eventually but not for 39 years. During that time, like me, they paid into some kind of pension and therefore have enough income to pay tax but not as much as their younger sisters will have because they are getting credits for time off work and only have to pay NI contributions for 30 years. It is a simple calculation:

First child at 25, give up work
Last child at school around 35
Even if she left school at 16, the maximum number of contributions would be 34 years but many stayed home longer than that as there were no after school clubs in those days and not much part time work.

So they worked hard, saved into a pension and are now being penalised. If they hadn't saved they would get pension credit. They lose out in every way.

AlisonMA Thu 19-Apr-12 16:19:40

Wownutter, I'm sure you are right. When I was working none of the young people would join the pension scheme even though the employer also contributed. They don't see the point and want someone else to keep them.

Gracesgran Thu 19-Apr-12 16:20:45

I do understand Alison, that the new pension is designed for those retiring on that date. I think that they need to manage expectations so they will continue to say this. However, it doesn't stop them deciding to offer anyone whose state pension matches the new pension the chance to opt in to the new system - they may do or they may not. I happen to think they probably will to keep the administration to a minimum, after all they are trying to symplify the system. I thought I had seen £140 somewhere; it is what it would be if the new pensioners were getting it at todays values today.

AlisonMA Thu 19-Apr-12 16:30:42

Gracegran, originally tehy talked about £140 but over the last couple of weeks since the budget they have been saying £150. Either way it doesn't help the goupr of women I am concerned about.

I wish I had your faith in them playing fair, I'm afraid I do not! The word 'symplify' was used by Mr Osborne to cover the fact of what he was doing not because they were really trying to symplify the system. If that was the aim they couldn't be doing the unfair thing with child benefit. There is no way that HMRC can cope with the extra load, they don't cope now. It is unenforceable and they will only be able to enforce it with those who are married.

Anagram Thu 19-Apr-12 16:32:16

Gracesgran, you have to either tick the 'Convert links automatically' box underneath the message space, or surround your link with [[ ]] to get it to become active.

Gracesgran Thu 19-Apr-12 16:48:20

How clever to have a litte box to tick - thanks Anagram. I hadn't gone down far enough. I am now hoping the names are coming up in bold too.

Ooooh don't get me started on the benefits system Alison. My daughter - no children, cannot see why she is paying child allowance to people who have chosen to have them. "Fair" is in the eye of the beholder. I do believe they are trying to simplify the system, not because I believe the to be exceptionally good people (I really don't know whether they are or not) but because, like the scorpion in the Frog and the Scorpion, because it is their nature. However, (are you getting fed up with me - do say if you are) I think they will only achieve simplification of the benefits system when they access it by individual rather than couple so that it matches the tax system. Noticably, that is exactly what they are doing with the pensions.

AlisonMA Thu 19-Apr-12 16:53:21

Gracegran, please explain what you mean about 'that is exactly what they are doing with the pensions'. Do you mean equalising the ages?

I have some sympathy with your daughter who I suspect has a lot more to say on this subject. I think that instead of the current rediculous plan they should limit child benefit to 2 children. Then those who could afford more could go ahead and have them but those living on benefits would have an incentive not to keep having more children. I would continue to pay it to those who already have more than 2 but months from now would stop giving it for people who produce a third or subsequent children.

mollie65 Thu 19-Apr-12 16:59:33

have to agree with Alison.
I paid into a private pension and have 36 years for my state pension with no HR credits (not available at the time) to make up the missing 3 years as is now possible for those who only need 30 years. This means that someone could have only paid in for 20 or so years and get more state pension than myself!
to add insult to injury my total income (state and private pension ) is around 12K a year as a single person out of this I have to pay my council tax, utilities etc. The extra tax allowance helped me considerably and if the differential had been maintained I would have paid less tax.
The poorest pensioners get pension credit and all the add ons - council tax benefit, cold weather payments and so on. They also pay no income tax. So they are in many ways better off than those who saved and paid into a private pension which gives very little back.
The richest pensioners (over 24K per annum) did not benefit anyway but I assume they will now that the differential has been removed.

AlisonMA Thu 19-Apr-12 17:03:45

Yes Mollie, the better off pensioners will benefit by the extra tax allowance but people like us will lose out. Do you sometimes wonder why you bothered to save into aprivate pension? You might have been better off if you had spent it on yourself at the time.

Gracesgran Thu 19-Apr-12 17:14:57

I think that the payments for the new pension will be £140/150 or whatever per person and not as now a single persons pension or a lower pension claimed on your partners contributions but I could easily be wrong about that.

I agree with your thoughts on child allowance under the current system. As you say they could continue to pay for children who are already here but not pay for any subsequent children. There are problems even with this when a couple split up and then a partner remarries and the second partner does not have children. If you moved to a system where benefits where paid to individuals rather than couples you could perhaps allow people to claim for one child per person. That would then mean if a couple split up (and had two children) each one would get child allowance for one child which could pave the way to an expectation of shared parenting which the conservatives said they would bring forward but are backing off at the moment. Umm ... I'm liking this more and more.