What should the government do?

Tancred

What should the government do to control state pension costs?

1 - Increase the state pension age to 70
2 - Increase NI contributions to 15%
3 - Make the state pension fully means tested
4 - Increase basic rate income tax to 40% for all over 65s

grey_gym_sock

increase the state pension age gradually, to 70 and then higher.

isn't this what they're doing already? (among other things. but they're not doing the other options you've given, and i don't like any of them.)

mania112

"Increase basic rate income tax to 40% for all over 65s" - the idea is to reduce liabilities for those in retirement!

"Make the state pension fully means tested" - that will make the costs go up because you need to have a minimum payment (for those on benefits) and it can't be lower than it already is. So many more will qualify for higher state pension - those that work.

"Increase NI contributions to 15%" would not make for a very popular government at the next election.

"Increase the state pension age to 70" as above

Proxy

I'd prefer increased contributions, personally

but it's never going to happen.

grey_gym_sock

NI contributions don't really pay for state pensions. they're just another tax, which goes into the general pot of public finances. state pensions are a cost, which comes out of that pot.

you can argue for increasing taxes to pay for higher state pension costs. but then why raise this tax (NI) rather than others?

Andy_L

grey_gym_sock wrote: »

you can argue for increasing taxes to pay for higher state pension costs. but then why raise this tax (NI) rather than others?

Becasue pensioners don't pay NI?

grey_gym_sock

Andy_L wrote: »

Becasue pensioners don't pay NI?

i don't follow. why shouldn't (some) pensioners pay part of the higher costs?

dunstonh

Tancred wrote: »

What should the government do to control state pension costs?

1 - Increase the state pension age to 70
2 - Increase NI contributions to 15%
3 - Make the state pension fully means tested
4 - Increase basic rate income tax to 40% for all over 65s

The state pension is not the issue. Why do they need to change anything that is not already in hand to do and proposed?

Tancred

My opinion is a 40% basic rate of tax on all income above £25k a year for all over 65s. This is the fairest and easiest method to implement. The alternative is forcing pensioners to pay NI, which would hit the worse off disproportionately. Having a much lower threshold for the 40% rate is a fair counterbalance to the lack of NI payments after age 65.

As for increasing the pension age - thumbs down. Working until 70 is a barmy idea and will prove unpopular with employers who will not want to be burdened with geriatrics - quite understandably in my view.

antrobus

grey_gym_sock wrote: »

NI contributions don't really pay for state pensions. they're just another tax, which goes into the general pot of public finances. state pensions are a cost, which comes out of that pot.

you can argue for increasing taxes to pay for higher state pension costs. but then why raise this tax (NI) rather than others?

There is a separate National Insurance Fund. There was a £4.6 bn deficit last year but, never mind, that was simply knocked off the surplus b/f of £43 bn.

http://www.official-documents.gov.uk/document/hc1213/hc11/1107/1107.pdf

Tancred

I'm tired of the government (and now Labour as well) using the deficit as an excuse to constantly postpone the state pension age when there is no need to do so. There is no hard evidence that people are living longer - only statistical projections which are very error prone. And the UK state pension is still one of the lowest in Western Europe.