The last chance to save the triple lock

growstuff

PS. I've just read your comment about means testing (Point 2) and agree with that too. I thought you were against means testing. Sorry if I've misunderstood you.

In general I am against it, but I can't see a way around it for situations where someone has not contributed but would otherwise have nothing.

I hope I have never said anything that would suggest that I wanted to see people do without - that could not be further from the truth. My comments about means testing have all been around the idea that when there are two-tier systems which give benefits to some and not others it is important that those who have contributed and/or have saved are not penalised for doing so, whether that involves pensions, social care or free entry to events etc.

Sorry that I misunderstood you Pippa. I've been trying to multi-task (and making a very bad job of it).

Dinahmo

Germanshepherdsmum

growstuff, you suggest taxing income from share dividends at the same rate as other income. That would be a horrendous blow to the pension providers as of course they invest in shares. What would that do to private pensions? Not to mention the blow to the companies (and their employees) whose shareholders would divest themselves of their holdings pdq.

Dividends are paid out of a company's income that has already been subject to corporation tax. If dividends were subject to a higher rate of income tax in the hands of an individual it would not affect the funds of pension providers.

I can see no reason why dividend income in the hands of individuals should be taxed at a lower rate than other sources of income.

I agree 100%.

PS. I've just read your comment about means testing (Point 2) and agree with that too. I thought you were against means testing. Sorry if I've misunderstood you.

Doodledog I don't disagree with Point 2 at all. Why should I? I worked full-time when my children were young and paid for nursery fees from my income as a single parent. I didn't have parents to help. I don't even think about it because it makes me cross.

Dinahmo

Germanshepherdsmum

growstuff, you suggest taxing income from share dividends at the same rate as other income. That would be a horrendous blow to the pension providers as of course they invest in shares. What would that do to private pensions? Not to mention the blow to the companies (and their employees) whose shareholders would divest themselves of their holdings pdq.

Dividends are paid out of a company's income that has already been subject to corporation tax. If dividends were subject to a higher rate of income tax in the hands of an individual it would not affect the funds of pension providers.

I can see no reason why dividend income in the hands of individuals should be taxed at a lower rate than other sources of income.

I totally agree Dinahmo. I also think it is the only way to stop growing inequality.

growstuff

I'm not sure how you work out that the only people getting Pension Credit are those on the old pension.

There are plenty of people who don't have 35 years of contributions.

I don't receive the full new state pension because I have an occupational pension (to which I contributed) and can never be eligible for Pension Credit because my total is too high. There are people who receive more state pension than I do who worked for fewer years and didn't contribute so much. Some of them are being topped up with Pension Credit.

I actually don't think £177pw + housing costs as a base for somebody with no contributions is too low. I live on less (or I did before I met my partner).

Thank you for replying growstuff. I think you will find I didn't say that the only people getting Pension Credit are those on the old pension. I wouldn't say that, as it isn't true. People going on to the New Pension need to know they can still claim Pension Credit if they are eligible.

What I did say is that the governments (the Coalition brought this in) intention is that Within a period (I would need to look it up but over something like 20 years from 2016 from memory) the only people getting Pension Credit will be those on the Old Pension.

I was writing quickly and not checking it was as clear as it could be but I needed to go out. However, I don't think I was as misleading as you infer. I knew I had the governments document on the Single Tier (as it was originally called) Pension. I have now found it and it says:

A range of reforms have been introduced since the Pensions Commission reports to improve state pension coverage and provide a simpler and fairer state pension system. But these changes will take a long time to come into full effect. The proportion of pensioners in the scope of Pension Credit, for example, will fall gradually from around 40 per cent of pensioners today to around ten per cent by 2050. Also it will not be until the mid-2050s that male and female state pension outcomes equalise.

I hope this helps.

Germanshepherdsmum

*growstuff*, you suggest taxing income from share dividends at the same rate as other income. That would be a horrendous blow to the pension providers as of course they invest in shares. What would that do to private pensions? Not to mention the blow to the companies (and their employees) whose shareholders would divest themselves of their holdings pdq.

Dividends are paid out of a company's income that has already been subject to corporation tax. If dividends were subject to a higher rate of income tax in the hands of an individual it would not affect the funds of pension providers.

I can see no reason why dividend income in the hands of individuals should be taxed at a lower rate than other sources of income.

Sorry, in point 2 I meant 'should not be credited'.

growstuff

The reason I've objected to some of your posts is because you contradict yourself.

There are two issues:

1 People need/want to see that their pension reflects what they've paid into the system. (Hands up here! I worked full-time for 44 years, so I've paid in loads and that's not reflected in what I receive - and it does annoy me.)

2 There are some people (mainly women) who genuinely didn't have the opportunity to earn high salaries for some years. There are also people who are disabled or chronically sick. As a society, I don't suppose anybody wants to leave these people with no money at all, so they need something they haven't contributed towards. How do you direct money to these people without giving money to those who don't need it, without means testing?

I agree with you that private pensions shouldn't be taxed "into oblivion", but at standard tax rates. Pension contributions aren't taxed when they are paid.

I would, however, tax property and share income at the same rate as income tax. I would also only allow tax relief at standard rate for all contributions, even high earners.

We do actually have a system which guarantees a minimum to all (via Pension Credit) with some people having other income. The issue seems to be that some people don't seem to think it's high enough.

1. We are agreed.

2. I have always said that credits should be paid for those who were unable to work. Where we may differ is that IMO those who choose not to because their partner can afford to 'keep' them should be credited for staying at home when those who can't afford not to work are, effectively, subsidising them. When someone who has not paid in 'retires', I would support their getting a means-tested benefit if their partner is no longer able to support them, but not otherwise. I don't see that as a contradiction - it is not reasonable for a couple to pay one lot of contributions but expect to get two pensions unless their joint income is below the level at which benefits can be claimed.

I have no beef with paying tax on pension contributions, but some of the suggestions surrounding pensions and UBI seem to argue for there being a basic amount that older people should have to live on, and anything they have after that should be taxed or withdrawn (eg TV licences or heating allowances). IMO, these should be free to all, as they should be paid for out of the tax that pensioners paid when they were working.

growstuff, you suggest taxing income from share dividends at the same rate as other income. That would be a horrendous blow to the pension providers as of course they invest in shares. What would that do to private pensions? Not to mention the blow to the companies (and their employees) whose shareholders would divest themselves of their holdings pdq.

PippaZ

--As the Pension Credits cover any time you are not working --
As the NIC Credits cover any time you are not working

Not necessarily. Some people didn't sign on for JSA/UCs.

I'm not sure how you work out that the only people getting Pension Credit are those on the old pension.

There are plenty of people who don't have 35 years of contributions.

I don't receive the full new state pension because I have an occupational pension (to which I contributed) and can never be eligible for Pension Credit because my total is too high. There are people who receive more state pension than I do who worked for fewer years and didn't contribute so much. Some of them are being topped up with Pension Credit.

I actually don't think £177pw + housing costs as a base for somebody with no contributions is too low. I live on less (or I did before I met my partner).

As the Pension Credits cover any time you are not working
As the NIC Credits cover any time you are not working

growstuff

Are you saying that those who have paid NICs all their working lives should only receive the same as others who will receive a pension automatically?

It is what governments are working towards growstuff. I'm not sure who doesn't pay or is credited with NICs these days.

Within a period (I would need to look it up but over something like 20 years from 2016 from memory) the only people getting Pension Credit will be those on the Old Pension.

As the Pension Credits cover any time you are not working all but a very few will get the Basic New Pension. This is rising faster than the Old Pension and faster than the Old Pension + Pension Credit. First, it will take people out of Pension Credit. Then it will rise above the floor for other means-tested benefits.

As people understand more and more about what their pension will be and that this sum will be above any additional benefits the government expects more people to take out private pensions. However, they have, as usual, stopped at the point of telling people. This scheme was based on the Australian Scheme. However, there its the law that you pay into another, private scheme. That, after a brief flutter of workplace pensions, seems to have died a death here.

Eventually, ours will look very like my proposal but eventually is probably not in our lifetime.

notgran

I can't altogether agree with awarding the Triple Lock this year as every State Pensioner would get a very high % increase. As so many people of working age are not receiving even a 1% pay increase and their income tax is going to be increased for many years to pay for the past 18 months, it doesn't seem fair that we pensioners should get a large increase, which of course they pay for in their national insurance. There are many reasons why "Only 4 out of every 10 pensioners receive the new state pension of £9,350 a year." One of those reasons is like me, many pensioners are receiving the old state pension and have been doing since we turned 60 or if born in the 1950's up to 65 (people aged 66 at state pension age may be entitled to the NSP). Or again like me we get an occupational pension and were "contracted out" which meant we paid less national insurance and our occupational pension guaranteed that we received more than the basic state pension. "The average state pension of about £8,000 a year is around 24/25% of earnings." I would challenge this, are you saying that everyone who gets a State Pension of £8,000 a year was in a job that was at least £32,000 a year? I know that can't be right. Finally "2.1 million pensioners (of which 1.25 million are women) live in poverty – a level of poverty higher now than in 2012/13" I don't know if these figures are correct but of course there are many people struggling and our welfare system should help them. Personally I think the £10.00 Christmas Bonus for pensioners should be scrapped and everyone on pension credit should get more money. Also the Winter Fuel Allowance needs looking at. Do Theresa May, Jeremy Corbyn, Diane Abbott, Stanley Johnson etc need it? Anyone who is of State Pension Age who is in the Higher Tax Bracket should not receive it, in my humble opinion.

My feelings exactly notgran????

The reason I've objected to some of your posts is because you contradict yourself.

There are two issues:

1 People need/want to see that their pension reflects what they've paid into the system. (Hands up here! I worked full-time for 44 years, so I've paid in loads and that's not reflected in what I receive - and it does annoy me.)

2 There are some people (mainly women) who genuinely didn't have the opportunity to earn high salaries for some years. There are also people who are disabled or chronically sick. As a society, I don't suppose anybody wants to leave these people with no money at all, so they need something they haven't contributed towards. How do you direct money to these people without giving money to those who don't need it, without means testing?

I agree with you that private pensions shouldn't be taxed "into oblivion", but at standard tax rates. Pension contributions aren't taxed when they are paid.

I would, however, tax property and share income at the same rate as income tax. I would also only allow tax relief at standard rate for all contributions, even high earners.

We do actually have a system which guarantees a minimum to all (via Pension Credit) with some people having other income. The issue seems to be that some people don't seem to think it's high enough.

growstuff

We currently have a system which is neither properly contributions-based nor means tested.

We do, and this is what I have argued against for years on here, with you vocally objecting to my objections?.

I'm not convinced that taxing occupational pensions into oblivion is fair either - if someone has paid into those as well as paid tax and NI, they should, IMO, see the benefit, and not end up no better off than if they hadn't done so.

We currently have a system which is neither properly contributions-based nor means tested.

Are you saying that those who have paid NICs all their working lives should only receive the same as others who will receive a pension automatically?

Personally I think the £10.00 Christmas Bonus for pensioners should be scrapped and everyone on pension credit should get more money.

It wouldn't surprise me if they do raise Pension Credit. That really would give them the next step towards a means-tested pension.

In my opinion, I believe all citizens of this country should, in old age, be given a pension they can live on without claiming any income-related benefits (except housing).

It would be so cheap to run and the savings on health care would be high too. A proper amount, with no income-related benefits, nor any universal "gifts from the government", would be somewhere near the Personal Tax Allowance (a reasonably educated guess). You then make sure the tax system taxes - progressively - all income above that level and include all unearned income, taxing it at the same rate. That would pay for any rise in cost although I have a feeling much would be offset by cuts in the costs and in the benefits of having a regular income with no "brown envelope" anxiety.

notgran

I can't altogether agree with awarding the Triple Lock this year as every State Pensioner would get a very high % increase. As so many people of working age are not receiving even a 1% pay increase and their income tax is going to be increased for many years to pay for the past 18 months, it doesn't seem fair that we pensioners should get a large increase, which of course they pay for in their national insurance. There are many reasons why "Only 4 out of every 10 pensioners receive the new state pension of £9,350 a year." One of those reasons is like me, many pensioners are receiving the old state pension and have been doing since we turned 60 or if born in the 1950's up to 65 (people aged 66 at state pension age may be entitled to the NSP). Or again like me we get an occupational pension and were "contracted out" which meant we paid less national insurance and our occupational pension guaranteed that we received more than the basic state pension. "The average state pension of about £8,000 a year is around 24/25% of earnings." I would challenge this, are you saying that everyone who gets a State Pension of £8,000 a year was in a job that was at least £32,000 a year? I know that can't be right. Finally "2.1 million pensioners (of which 1.25 million are women) live in poverty – a level of poverty higher now than in 2012/13" I don't know if these figures are correct but of course there are many people struggling and our welfare system should help them. Personally I think the £10.00 Christmas Bonus for pensioners should be scrapped and everyone on pension credit should get more money. Also the Winter Fuel Allowance needs looking at. Do Theresa May, Jeremy Corbyn, Diane Abbott, Stanley Johnson etc need it? Anyone who is of State Pension Age who is in the Higher Tax Bracket should not receive it, in my humble opinion.

@notgran How can you give people on pension credit more money unless you also increase the state pension and/or change the new rules, at the moment PC is approx £177 as apposed to the new basic of £179 and don't forget the new pension is capped. So what you are advocating is someone with less contributions getting more than people who have contributed more including people who have contributed more with no extra pension to show for it, what a ridiculous notion

Yes Dinahmo the Equitable Life fiasco was scandalous. I had a pension scheme with them for many years. Every year they advised that I should be ‘contracted out’ which of course meant Government funds rolling into their coffers supposedly to swell my pension pot - until the balloon went up and they suddenly said I should be contracted in again. So not only was my pension pot decimated, I don’t get a full State pension. There are a great many people in my position. So much for saving for old age.

notgran I think it's a percentage of the current earnings average.

Many people of our age will have worked for small companies and the chances are that they didn't have a pension scheme and so had to rely upon the state pension. Back in the 60s and well into the 70s state employees had the benefit of a pension scheme but not everyone.
Some people who had pensions with Equitable Life saw a substantial reduction in their pension fund and others, such as employees of The Daily Mirror and more recently BHS found that the company's pension funds had been raided.
That's one reason why the 70 pluses are poorly provisioned.

Another reason is that you had to be working for an employer for a specified number of years before you could join their scheme and many young people changed jobs frequently back in the 60s and 70s. This was long before most people, apart from the rich, knew much about pensions.