Moral dilemma?

Lizzie2015

My friend told me that she pays 80% of her wages into her pension scheme. She is able to do this as her husband earns enough so that they are able to comfortably live off his wage alone.
As she now 'earns' less that the threshold, she does not have to pay taxes or pay back her 20k+ student loan. The intention is that she will reach eventually reach retirement and the debt will be written off. My issue is that why should she not have to pay her way whilst the rest of the country have to? As a social worker I work with some of the most vulnerable people who are struggling to get by. Why should they sub my friend so that she can go on expensive holidays and enjoy an early retirement?
What do other people think? Is this ethically wrong or am I just being fussy?

dunstonh

My issue is that why should she not have to pay her way whilst the rest of the country have to?

Their sensible financial planning is reducing their tax bill. You are free to do the same.

As a social worker I work with some of the most vulnerable people who are struggling to get by. Why should they sub my friend so that she can go on expensive holidays and enjoy an early retirement?

Because her and her husband are working hard and have every right to spend their money as they wish.

What do other people think? Is this ethically wrong or am I just being fussy?

There is nothing ethically wrong at all with using annual allowances available to you.

dano17439

She can do want she wants with her wages. Its not her fault the way the system works

hugheskevi

There are lots of things which one could consider morally questionable around pensions

• Is it right that people should get higher means tested benefits (Tax Credits, Council Tax benefits, Housing Benefit, etc) if they contribute more to a pension?
• Should individuals be able to avoid National Insurance just due to the payroll system their employer uses (salary sacrifice)?
• Should folk be able to avoid paying higher/additional rate tax by higher pension contributions?
• Should individuals be able to reduce child maintenance payments by increasing pension contributions?
• Should individuals be able to go bankrupt and have pensions which could be in excess of £1m protected whilst their creditors lose out? Is it different if they are aged 55+ and could readily access the funds?
• Should individuals be able to reduce income below £50K to keep full Child Benefit despite having an income well in excess of this amount?
• Why should couples with roughly equal incomes be in a far better position from a tax and pension perspective than a couple where one member has a large income (equal to two times the couple with equal incomes) and a spouse who does not earn?

Best not to worry about things which are entirely legal and operating as the system intends. The friend's husband may well be a higher/additional rate taxpayer - is it morally right that he has to pay twice the rate of standard income tax at an arbitrary threshold?

As a social worker I work with some of the most vulnerable people who are struggling to get by. Why should they sub my friend so that she can go on expensive holidays and enjoy an early retirement?

Most of those vulnerable people will be net beneficiaries from the tax and benefit system. The friend and husband will probably be net contributors. Why should the friend and husband sub vulnerable people who are a drain on the system by paying more in than they have to? [playing Devil's Advocate here]

Triumph13

I see no 'moral' difference between student loan repayments and any other tax. They may call it a loan, but if it walks like a duck and quacks like a duck...


The couple are saving for their retirements and choosing to do it in the most tax efficient way possible. This is no different to a couple where only one pays HRT and so the bulk of contributions get routed through her.


The moral boundary for me personally comes when people try to use pension contributions not to reduce / defer the amount of tax they pay, but to get welfare benefits that have to be paid for by everyone else. Even that though is not completely clear cut when you get to things like child benefit where the benefit is supposed to be for the child and the loss for high earners feels more like a tax than a benefit removal.

dunroving

Lizzie2015 wrote: »

My friend told me that she pays 80% of her wages into her pension scheme. She is able to do this as her husband earns enough so that they are able to comfortably live off his wage alone.
As she now 'earns' less that the threshold, she does not have to pay taxes or pay back her 20k+ student loan. The intention is that she will reach eventually reach retirement and the debt will be written off. My issue is that why should she not have to pay her way whilst the rest of the country have to? As a social worker I work with some of the most vulnerable people who are struggling to get by. Why should they sub my friend so that she can go on expensive holidays and enjoy an early retirement?
What do other people think? Is this ethically wrong or am I just being fussy?

Not sure whose dilemma it is - yours, or theirs?

There are lots of things about the system I don't like, but if they aren't actually cheating the system I wouldn't lose any sleep over it. I'm sure they aren't.

Must say though that I didn't realise if you didn't pay a student loan because of "low income", it would eventually be wiped off.

Lizzie2015

Thanks, some useful comments. I realise there is no legal issue here so perhaps I just need to mind my own business lol!

Cyberman60

The major failing was a government encouraging people to incur debt for the sake of having a headline figure of 50% of students going to university to get worthless degrees or dropout anyway. Yet another Labour failing in order to massage unemployment figures, and another cost adding to the annual deficit legacy.

kidmugsy

Lord Clyde, Ayrshire Pullman Motor Services v Inland Revenue 1929

“No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer’s pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue”

That's why it's so unfair to criticise Mr Moribund for planning to avoid IHT on his parents' house. He was being perfectly sensible. You can criticise his whinging about other people avoiding tax, of course.


P.S. Why do you think your clientele are subbing her? Are they actually paying anything much into the pot? The likelihood is that her husband is subbing them, surely?

System

We live in a democracy, we have a free vote, we elect a parliament and a government to run the country on our behalf. To do this we conceed their right to make certain rules, which most of us are happy to abide by.

We don't keep a dog and bark too - they do their job, we organise our lives to follow the rules that have been put in place on behalf of all of us. It's not our job to decide to trim some of the rules on moral grounds according to our own preferences.

There might I suppose exist a form of government called a "moralocracy". There are no rules at all. Everyone is free to decide how to behave according to our own moral standards. Obviously these may differ, but all morals are valid, so we'd try and rub along somehow.
Perhaps for obvious reasons this has never been tried.

In the meantime, we live under the present system. The government has decided that saving for a personal pension is of benefit to society generally, and encourages people to do so by offering certain tax and other advantages, up to the value of a person's annual salary.
If that's what they (ie we) want, then that's what we do.

Lizzie2015

kidmugsy, yes whilst of course many of my clients are claiming benefits (but not the 30k that the Daily Mail would lead you to believe!!), others are working full time at minimum wage, struggling to make ends meet, yet still have to pay into the pot.
I guess I feel I sense of duty to pay into our health, social care & education healthcare systems to help those that are worse off than me. I also feel that as I have been to University and now earn a decent wage as a result, then it is only fair that I pay my loan back.