The potential of no longer paying National Insurance.

If NI was scrapped it would cost the country £50bn a year.

I do think however that the NHS is under real threat for its demise from this government.

NI just goes into a pot with all other tax revenue. It doesn’t pay for the NHS or pensions nowadays. Hunt rightly described it as a second tax on income and a tax on employers. Obviously if in time it is phased out then other revenue it produces would have to be found elsewhere.

I don’t trust them. Yes we know it all goes into a pot which has been pilfered over the years but the huge loss of revenue must affect the NHS and Pensions.

NI may not ‘pay’ for pensions but it is certainly linked to pensions! I’m sure those of us who receive state pension are well aware that our number of NI contributing years determines how much pension we get.

LizzieDrip

NI may not ‘pay’ for pensions but it is certainly linked to pensions! I’m sure those of us who receive state pension are well aware that our number of NI contributing years determines how much pension we get.

But there's no reason why the way state pensions are determined can't be changed in the long term.

NI is a flawed tax. Very high earners pay a lower percentage of their income in NI than the lower paid. The self-employed pay a different rate and it's a tax on employers.

The system does need a huge overhaul, but it's long-term and Hunt won't achieve it.

I’m concerned about the possible abolishment of NI. I think we all know that it doesn’t pay for our state pensions, but if it was abolished, then the money would need to be found from elsewhere. Is that why the tax bands have been frozen, and will they eventually be abolished too, so that tax is paid on all income? Or will income tax need to rise to 30p in the pound, or even more. It’s obvious that if NI is abolished, that the tax take will fall, and therefore the money will need to be found from elsewhere, and the elsewhere may be somewhere that detrimentally affects you.

I’m wondering if abolishing NI, which is currently linked to payment of the state pension, will lead to state pensions being means tested. It would be a way of breaking the contract between the government and the employee because NI contributions would no longer paid and therefore there would be no need to pay state pensions to the ‘better off’ pensioners. Both my sons have thought for some time that state pensions will become means tested, and this would provide a mechanism for this to happen.

I think it is the aim of the Tories to means test-pensions. This is why they are pushing through legislation to access the bank accounts of pensioners, who are not currently means tested, and why they have introduced voter ID. They will end up based on household income, which is deeply unfair to two-income families who have both contributed tax. Why should someone who has paid tax as an individual have their retirement income determined by other members of their household?

Ultimately they would like all benefits to be means-tested, including bus passes, prescriptions, child benefit (which is already means-tested, and will soon become another 'household income-based' benefit), free GP appointments and A&E visits, and anything else they can find a way to withdraw.

They will, of course, call it 'targeting', and make it increasingly difficult for anyone to claim the things that we used to take for granted. They have sold a lot of young people on the idea that pensioners are grasping and unproductive (just take a look at Mumsnet to see some shocking posts about the older generation), and have a good chance of getting away with cutting pensions if they claim it is to pay for childcare or tax credits.

The only thing we have in our favour is that older people are more likely to vote, so we must all be sure not to fall for the 'they are all the same' line, and to get voter ID if we don't have it already.

Totally agree with everything in your post Doodledog. It’s the Tory small state ideology!

Apparently pensioners have lost out in the budget to the tune of being £1000 worse off.

Whitewavemark2

Apparently pensioners have lost out in the budget to the tune of being £1000 worse off.

I've already commented on the other thread, but I don't see how that's been worked out.

For me personally, the budget is neutral. Yes, I have to pay tax on the increases to my occupational pensions, but I expected that. I didn't pay tax when I made the contributions and the percentage increase on them is higher than many working people have received in pay increases over the last year.

Pensioner incomes are already partially means-tested with pension credit, which is a "gateway benefit", so opens up other benefits automatically. Pension credit is gradually being phased out as more people receive the new state pension, which means most are not eligible for pension credit.

I actually think NI should be reformed because the amount people receive in state pension correlates very poorly with the amount they pay in. The whole system needs to be more transparent.

It’s an average though, which means that one person’s gains or losses in a disparate group such as pensioners will be very different from those of others. Also, the figures are net losses for pensioners, not losses peculiar to them.

I read that the average pensioner will lose £1000 by 2027/28, but I’m not sure of the relevance of that date. Is it the probable date of the next budget? Whatever the significance it is not the same as losing £1000 a year, which is the most usual way of describing changes in income.

Mostly it is because of fiscal drag, which is offset for workers who will get a cut in NI, but as pensioners don’t pay that they pay the full tax rise. If you already pay tax on your pension you will lose out less than someone who didn’t pay tax before but will now have to pay when the increase to the SP kicks in. Otherwise you will lose 20% of the increase. Slightly higher interest rates will mean people (pensioners included) paying more tax on savings too. Higher rate taxpayers will lose more, with an average loss of £3k by 2027/8, apparently.

Then there’s the cost of inflation, which means that everyone (including pensioners) will pay more in living expenses, and the rise in council tax will also be factored in.

I understand that pension contributions aren’t taxed when they were paid years ago, but that doesn’t make the cost of living any easier for those living on a fixed income now.

I have no issue with the cut in NI benefiting those in work, but there is a lot of smoke and mirrors surrounding what was portrayed as a hike in the SP.

If Hunt is expecting to lose the election anyway, he may feel that there is nothing to gain by keeping pensioners onside.

Don’t do what we do here- a mixture of private and public health. It’s not the best , it either costs a fair bit but is quick( you have to pay the ‘gap’ between what the insurance companies refund and the balance) or you have to wait forever for treatment. Worst of both worlds really. The Docs are very skilled but there is a shortage. We poach from all over, including the UK, because the pay is pretty good.

I guess if the money many pensioners are paying to get operations such as joint replacements is factored in, their losses would be even higher.

I expect Hunt does realise that the Conservatives are likely to lose the next election, so he can say/do what he likes. However, if he wants to make a last ditch attempt to woo voters, he's right to target young working families, who are bearing the brunt of the cost of living increases. Income tax, NI and student loan repayments (if they have them) take a massive chunk of gross income. Not only that, but childcare costs are through the roof, as are rents and if they're not renting, their mortgages are likely to have risen. Polls show consistently that anybody under about 45 is unlikely to vote Conservative and I can't say I blame them.

There's too much complication in operating National Insurance. Endless NI codes and at the end it's not ringfenced anyway just goes into the pot.
I would love to see the back of it and a Social Fund Tax devised which would cover state pension, basic sick pay. social care, and medical inc dental card. And we all pay it at varying levels. Those on a higher tax rate pay a higher Social Fund. Those on lower earnings pay less. But it would have to be ring fenced so that we all know what our payments go towards. And should include pension age people. Every adult but varying amounts and deducted as part of tax but hived off and show as a Social Fund deduction.

Private or company ension contributions should only have a set tax relief. The same for all earners.
The state needs a massive shake up and it will take years and should be a cross party exercise.

Agreed, HelterSkelter. I wouldn’t restrict payment to workers though - working people support everyone else, including those who can afford not to work. Everyone using the things a social fund would cover should contribute unless they are unable to do so because of illness or disability (or the need to care for someone ill or disabled). It could be managed so that contributions are paid ‘in kind’ rather than financially, but everyone should contribute.

I agree that young workers need help, growstuff. I still don’t see it as a competition though. There are too few people supporting too many, and that will only get worse. Something has to give, and encouraging a race between old and young to see who gets to the bottom first is ignoring the fact that wealth and opportunities are unevenly distributed and talent is wasted. The system does need a shake up, and we need difficult but honest conversations about who should pay for what, with carrots and sticks to ensure that everyone pulls their weight when they can, so we can all take a back seat when we need to.

NI has never gone into a sperate pot, it has always gone into the general taxation pot, because governments of all hues have chosen to run pensions on a 'pay as you go' basis rather than as a separate listed fun.

Banishing NI will have no effect on NHS. What worries me about banishing it for pensions is that pensions will be seen as 'benefits' and not as a right based on a life time of contributions.

I would like us to make clear contributions to a pensions fund (like sovereign wealth funds) built up and invested over the years, so that the 'pay as you go' element gradually disappears and our pension is a clear 'right' for which we have payed.

I agree with you HelterSkelter. The system needs a massive overhaul and it shouldn't be left to political parties to score points. It needs to long-term and cross party.

What hasn't been said here is the amount of administrative money this would save both the government and employers. Yes money would have to come from elsewhere but a single stream tax scheme would be much easier and cheaper to administer.

greenlady102

What hasn't been said here is the amount of administrative money this would save both the government and employers. Yes money would have to come from elsewhere but a single stream tax scheme would be much easier and cheaper to administer.

Hardly a saving of admin costs for employers. These days NIC is calculated as part of the same programme as calculates income tax due on all emoluments.

I've always felt that having paid NI all my adult life it allows me the luxury of reaping the benefit of a SP and NHS care - to my mind, paying it forms part of the contract I have with the state for these services. I think I'd like to see taxation simplified, and getting rid of NI and blending it into general taxation seems an obvious way of doing it. However, I really don't trust this government and fear that future generations will find themselves with no arguments to maintain this right unless their tax payments are ring-fenced in some way. Scary looking to the future with such a low level of trust in government - the Tory party has undermined so many of our institutions and attacked so many of our rights and freedoms that I'd now argue to keep the stupid NI just as a way of ensuring we have some, however flimsy, formal acknowledgement of our rights to basic services like health, pensions, welfare etc. I know it's never been ring-fenced but that's up to the government and the treasury, they should be able to manage the publics money for the benefit of the people of the country.

It’s not just this government, Labour are also signed up to getting rid of NI. Both parties want to ditch the payment of state pensions and make them means tested.

I've always felt that having paid NI all my adult life it allows me the luxury of reaping the benefit of a SP and NHS care - to my mind, paying it forms part of the contract I have with the state for these services.

Didn't you feel that the contract had rather been broken when the pension age was increased by 6 or 7 years? If you'd had a pension with any other supplier, this would not been allowed to happen.

I'd like to see the alternative of not having National Insurance contributions. Call me cynical but I'm not sure anybody will be a real winner in that scenario!