The potential of no longer paying National Insurance.

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.

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.

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.

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

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

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.

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.

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.

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.

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 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.

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.