Ed Balls and the State Pension

bluebell

With regard to the overall budget being looked at including the amount spent on pensions in my case the government will not be spending any money on my state pension.
I was paying 40% tax for over 20 years and the maximum insurance contributions so the government is really hanging on to my savings and will hopefully repay some in the future.
What the government needs to do is cut pensions and allowances for people who have paid little or no tax and National Insurance Contributions and increase the state pension for people in my position.

Frank

I know some of you will think ' she would say that wouldn't she' but there really is an enormous difference between capping the state pension and capping the pension budget. It's obvious that most of the press will wilfully put the worst spin on whatever EB says. And he's right to say that the overall budget should be looked at including the amount spent on pensions.

More explanation here:
www.guardian.co.uk/politics/2013/jun/09/labour-ed-balls-curb-welfare-spending

I couldn't find where he had used those words or even implied them either. The Daily Telegraph reported it like that, but I don't think that is quite the same thing, is it?

Flick I'm not being difficult but where did he actually say the words 'capping the state pension'?

Re tax relief, I don't for one minute think it could or should be retrospective and as for putting up the pension age, they could carry on doing what has already been happening. I'm not saying the latter should happen but it would be part of the solution. I do think the former should happen however - there have been some changes, they should continue.

The retirement age is already rising and if that was what EB meant he wouldn't have talked about capping pensions. Capping a pension means stopping it rising or stopping it rising for some people.

He is on a softening offensive. Make vague remarks like this now, repeat them casually a number of times, putting something vague but noble in the manifesto about all those most fortunate in society making a contribution etc etc and then, once they are in power in comes this measure.

Cynic? Me?

bluebell

I don't think the government could get any of the higher rate tax relief back from people who have been allowed it in the past.
Also putting the retirement age up suddenly could cause problems as people plan on getting their state pension at some point.
Several people were made redundant where I worked at about 55 and never managed to find work again.
They got their occupational pensions paid immediately and many of them are now about 63.
I am just wondering what employer would want to employ these people who have not worked for 8 years.

Frank

Flickety I really hope you are right! If they propose that there will be such an outcry that EB will lose his job, which as far as I can see would only be a good thing.

But instead of a cap on pensions, they could change the pension age. What I don't understand is the still generous tax relief on the pension contributions of higher earners - capping that at the basic rate if tax would save a fortune

How else can Ed balls aka the Labour Party put a cap on pensions? The state pension is not high and many people get it topped up by Pension Credit to reach an anywhere near acceptable amount. The only way it can be done is to reduce the amount of state pension you give better off pensioners, of whom I am one.

Yes, of course it will inhibit saving by the middle to lower paid but when have you ever known a government act rationally or even less think things through.

I read yesterday that the amount Westminster Council is paying in housing support has increased by 65% rather than decreased since the bedroom tax was brought in because so many people have been made homeless because they could not meet the rent on the extra bedroom from their benefits or low wages that the number of families in bed & breakfast and other temporary accommodation has rocketed costing the Council that extra 65%. In addition some people have had to give up work, particularly if they work unsocial hours because their temporary housing is so far from their workplace and so difficult to access they have been forced into unemployment.

I wonder if he could get away with that. There would be a almighty protest (which I would join) and possibly a challenge in court.

Flickety I hope you're wrong but fear you're right.
Have you any particular reason for thinking this is what he might do?

FlicketyB

I he does what you say in your thread he will remove any incentive for people to save for a pension particularly people with smaller occupational pensions say under £10,000 per year.

With regard to you saying an employer deciding what you get my ex employer proposed that people who paid in an extra amount for the London element of the pension should not be paid if you retire outside London.

This was ridiculous as people who had chosen not to pay for their London element to be pensionable and not paid the extra contributions would get the same pension.

Frank

I suspect what he intends to do is cap how much state pension those with occupational/private pensions can receive. For example if your occupational/private pension exceeds £100 a week he will knock £5 off your state pension for every £10 of private pension. your receive over that amount.

Considering that most of us paid NI contributions each week towards our state pension, just as those who were also in occupational pensions schemes paid monthly sums into their company pensions it is a bit like your employer deciding how much pension you get should be based on how much state pension you get rather than how much you contributed to the scheme.

I think that PIP will be non-taxable as are DLA and AA, but don't quote me on that yet!

As opposed to DLA which is not counted as taxable.
Does anyone know what will happen with PIP?

Thank you Bluebell it's nice to be appreciated and your approbation is gratefully received

Aka - you are such a wit!!

What is meant is that these benefits are taxable - count as part of you total taxable income against which, as you say, your tax allowance is set.

Anyway 'spherical objects' to Mr Balls

Since when was the state pension taxed? I know it counts towards your tax allowance, so perhaps you mean that?

When - crossed posts!

The most common taxable state benefits are:
Carer's Allowance
Jobseeker's Allowance
Employment and Support Allowance - 'contribution' based (if you have paid enough National Insurance contributions)
Incapacity Benefit - from week 29
Weekly Bereavement Allowance
State Pension

Dara- there is nothing intrinsic to the definition of benefit that means it isn't taxable. Although I agree that the basic state pension is inadequate, no one has to live on just that - there would be pension tax credit top up and council tax support and housing benefit if applicable. What I don't find clear from the article is whether it means capping the pension or capping the pension budget- the latter can be done by raising pension age again but still keep the triple lock in place.