The potential of no longer paying National Insurance.

Doodledog

*However, healthcare cost about a sixth of national GDP and I really don't see why those who can afford it (whether that money is coming from earned or unearned income) should pay so much less towards it, based on age.*
At what level of income or wealth would you decide that someone ‘can afford’ to pay? Yet again, a means-tested approach would drag down those who have always had low to middle incomes, and reduce their chances of being comfortable in older age.

If someone is not working then presumably their income or wealth is from money they have saved when they did work. Why should that be used against them in retirement?

Would this be a household expense or would those who didn’t contribute in their ‘working’ lives be exempt again? If it is to be included in general taxation would this represent a cut in the State Pension in real terms, and is that ok?

I’m not saying that I don’t agree with pensioners paying NI however it is badged - I pay it myself- but it should be the same rule for everyone.

IMO the vast majority of people could afford to pay something towards the NHS - at whatever age. If payments were integrated into the general tax system without some myth that NI is somehow different, those with higher incomes would pay more. If that's what you consider to be means testing, so be it.

I would make exceptions for those with disabilities or serious illnesses, which is why I included a proviso about affording to pay.

Doodledog

*However, healthcare cost about a sixth of national GDP and I really don't see why those who can afford it (whether that money is coming from earned or unearned income) should pay so much less towards it, based on age.*
At what level of income or wealth would you decide that someone ‘can afford’ to pay? Yet again, a means-tested approach would drag down those who have always had low to middle incomes, and reduce their chances of being comfortable in older age.

If someone is not working then presumably their income or wealth is from money they have saved when they did work. Why should that be used against them in retirement?

Would this be a household expense or would those who didn’t contribute in their ‘working’ lives be exempt again? If it is to be included in general taxation would this represent a cut in the State Pension in real terms, and is that ok?

I’m not saying that I don’t agree with pensioners paying NI however it is badged - I pay it myself- but it should be the same rule for everyone.

Not necessarily. Owning BTL property isn't working, but quite a lot of pensioners have substantial income from this route.

If we all recieved what the national pension pot could afford we would get less than half of current pensions. With larger numbers of pensioners living ever longer, and working numbers falling the system has to change.

There is no justification for paying a state pension to those with wealth.

Katie59

If we all recieved what the national pension pot could afford we would get less than half of current pensions. With larger numbers of pensioners living ever longer, and working numbers falling the system has to change.

There is no justification for paying a state pension to those with wealth.

So what is the justification for taking NI (i) from people on very modest salaries? They might not stay poor all their lives, but what incentive is there for people to try to improve their circumstances if as soon as they do they are penalised? This is particularly the case when people know that if they don’t bother to save, work overtime, take courses and sit exams etc they will get money paid for (ii) by those who do?

Of course people whose earnings are affected by sickness or disability should pay less and get more. Do I really need to point that out in every post on every thread on this subject?

Taxation is means testing, but if everyone (ie everyone who is capable of working (iii) paid it, and not just those with income from paid work - then it would be a fair way of redistributing money. My point (as I keep saying) is not that we shouldn’t be taxed, but that taxing only workers, and not taxing those who choose not to work (iv) and then also means-testing pensions, social care and benefits such as childcare is a double whammy for those with modest incomes who are striving to improve their circumstances.

(i) however it is badged
(ii) the principle applies regardless of which economic theory is used to describe the circulation of money.
(iii) unless they are sick or disabled or are caring for someone sick or disabled, and notwithstanding purchase tax or tax on savings
(iv) see (iii) above

There is no justification for paying a state pension to those with wealth

I presume, in that circumstance, all contributions, with interest, would be paid back to those who had contributed to their pension, but were too wealthy to get one.

What is your definition of wealthy, is it based on capital or income or a mixture of the two?

That question is never answered, is it?

M0nica

^There is no justification for paying a state pension to those with wealth^

I presume, in that circumstance, all contributions, with interest, would be paid back to those who had contributed to their pension, but were too wealthy to get one.

What is your definition of wealthy, is it based on capital or income or a mixture of the two?

It’s already been spent hasnt it and new contributions are partially funding current pensions.

The only place that more can be directed to those in need is from those the have more than they need. Nobody likes wealth taken away it’s always someone else that should pay.

I have asked that question before, in various contexts, and there has never been a reply. Perhaps Katie will give us her definition.

Wealthy capital and income, income is already taxed.

That doesn’t answer the question, unless you are saying that the definition of wealth is having savings and an income. That would surely be the case with everyone but the very poorest living from one payday/pension day/benefits payment day to the next with nothing in the bank. Are you really saying that a state pension should only be paid to those with absolutely no savings? I doubt that you are.

Katie59

Wealthy capital and income, income is already taxed.

No of course not, the way care home system works is that if your savings are below a certain level the value of your assets is clawed back when you die to pay for your care
Set whatever level you want £20k, £50k, make no mistake restricting pensions is going to reduce the amount you pass to your beneficiaries.

My cousin lives in Australia they have a house and investments, neither of them get a state pension their assets are too high.

Katie59

Katie59

Wealthy capital and income, income is already taxed.

No of course not, the way care home system works is that if your savings are below a certain level the value of your assets is clawed back when you die to pay for your care
Set whatever level you want £20k, £50k, make no mistake restricting pensions is going to reduce the amount you pass to your beneficiaries.

My cousin lives in Australia they have a house and investments, neither of them get a state pension their assets are too high.

Reply was to GSM

It’s already been spent hasn't it and new contributions are partially funding current pensions.

Yes, because NIC is effectively a Ponzi scheme but it is also a contributory benefit. We pay what we are asked to do during our sometimes very long working lives - often more years than we need to qualify for a full state pension.

You may as well say that workplace pensions shouldn’t be paid to the “wealthy” either. Employer’s pension schemes are under enormous pressure to remain fully funded. Many came close to crashing altogether as a result of Kwarteng’s mad Autumn 2022 Budget, had the Bank of England not stepped in to save them.

It's possible that many people are "wealthy" only because they have contributed to workplace pensions which could disappear overnight through government incompetence or corporate failure e.g. BHS, Wilko etc.

You are arguing to dissuade people from working and making provision for their old age.

The Australian state pension system operates on a non-contributory basis.

“You are arguing to dissuade people from working and making provision for their old age.”

There are a lot who are feckless, avoid work and live off benefits now. Most of the low waged do work because they want to improve their lives, none of us know what the future will bring but most of us try to improve.

Regardless of capital taxation a better income enables a better standard of living, there is plenty of incentive to work.

You are changing the subject.

You said:

There is no justification for paying a state pension to those with wealth.

but are silent on what you believe constitutes "wealth" for those who have spent a long working life contributing to both state and workplace pensions.

You argue that the UK should means test like Australia but that country's state pension is not contributory so that comparison does not hold water.

It’s always the same on GN - people talk about ‘wealth’ but are never willing to define it. Is anyone who owns their house and is mortgage-free ‘wealthy’ even if they have no savings? The reality is that ‘wealth’ is entirely subjective.

(or money creation - in case Maizie is reading).

😂

I'm reading, growstuff, but it's pointless joining in when everyone is having so much fun with a discussion based on the 'taxation funds spending' myth...

We don’t get a penny from the Australian state pension despite the fact that we have worked 40 years in my case, similar for husband. We rely on our private pension. If you don’t work or had a very low income you get everything including reduced council rates, free medical things etc.Moral being, don’t work too hard !

TinSoldier

You are changing the subject.

You said:

There is no justification for paying a state pension to those with wealth.

but are silent on what you believe constitutes "wealth" for those who have spent a long working life contributing to both state and workplace pensions.

You argue that the UK should means test like Australia but that country's state pension is not contributory so that comparison does not hold water.

I am proposing that the UK could have a non contributory pension but is that not the case in the UK now, NH contributions are only extra taxation, if we accept that taxation does not fund spending.

Wealth is your entire assets, property, pensions, investments, and cash in hand.

I agree that we need the incentive to work and improve ourselves but property price inflation is not work it is a windfall. That’s what make us “boomers” so much better off than our children and especially grandchildren.

nanna8

We don’t get a penny from the Australian state pension despite the fact that we have worked 40 years in my case, similar for husband. We rely on our private pension. If you don’t work or had a very low income you get everything including reduced council rates, free medical things etc.Moral being, don’t work too hard !

I know someone who worked extremely hard all her life from the age of 14; most of their 'wealth' went in his care home fees.

Luckily, after her husband died, she was able to afford a retirement property, and she received the Australian state pension (much more generous than ours) but then that property was sold for her care home fees.

TinSoldier

The Australian state pension system operates on a non-contributory basis.

And means-tested.

I agree that we need the incentive to work and improve ourselves but property price inflation is not work it is a windfall. That’s what make us “boomers” so much better off than our children and especially grandchildren

It's just academic, though. An amount on paper.
And who will benefit from this property price inflation? Unless it goes in care home fees, then our children and/or grandchildren.

Or the cats' and dogs' home if they whinge too much about the wealth of baby boomers.

Katie59

M0nica

There is no justification for paying a state pension to those with wealth

I presume, in that circumstance, all contributions, with interest, would be paid back to those who had contributed to their pension, but were too wealthy to get one.

What is your definition of wealthy, is it based on capital or income or a mixture of the two?

It’s already been spent hasnt it and new contributions are partially funding current pensions.

The only place that more can be directed to those in need is from those the have more than they need. Nobody likes wealth taken away it’s always someone else that should pay.

You may as well say that if your house catches fire and you 'can afford' to make good your losses that you shouldn't expect to be able to claim on your insurance, as the money is needed to fund those who haven't insured their own houses and find themselves in trouble.

I am fully aware, as no doubt are most of us, that the money has already been spent. That is not the point, though. The expectation was that we would pay for the previous generation, the next would pay for us, and that the government would manage the system so that this would remain possible, as they had the knowledge of demographics and so on that would make our contributions safe in our hands. That they have failed to do so is not the fault of individuals, but of the governments who have mismanaged things and refused to do anything about the mismanagement.

Of course taking money from everyone who works and giving it to those who don't removes incentive. It really doesn't matter whether one believes that taxation funds spending or not (although in my previous post I made a special footnote to acknowledge that point of view) as it is the practicality that matters. If having £X in the bank makes someone ineligible for a pension despite their having paid in for decades, why wouldn't they stop working when they reach £X-1? Doctors are doing that all the time with private pensions. The sums are much smaller where state pensions are concerned, but the principle is the same.

Nor does it matter whether NI is ring-fenced for pensions or social care - again, the principle is the same as if it were simply added to taxation. It is those who work who pay it, and on the whole those people are also contributing to society by producing 'things' or providing services.

To me, it is perfectly fair that those who earn more pay more, but it is not fair that those who don't work pay nothing (with exclusions as per previous post) yet are given money which is denied to those who contribute, or to means-test contributors both when they pay in and when they take out. A pension should be a universal benefit. If this proves too expensive then steps should be taken to take contributions from those opting out of work or to means-test those who haven't contributed, not those who have. I don't know how anyone can believe that it would be fair to means-test contributors in order to pay pensions to those who have not contributed.

The question that there is never an answer on, and I have aksed this question on a number of threads were peoplewrite about what should happen to 'the wealthy' and their money, is that we ever get a definition of wealth.

As I asked up thread. Is it capital or income or both and how should the balance go. Is it those earning twice the average annual income or ten times, people whose assets are twice the price of an average house or ten times?