Move the State Pension age back to 60 for both men & women

nigelbb

QrizB said:

nigelbb said:

zagfles said:

It's blatently obvious that he was referring to NI rates, not take, being increased by 7%, eg employee rates going from 12%/2% to 19%/9%. That would be a £6330 increase for someone on £100k.

No. Increasing a rate by 7% is increasing it by 7% not by 60% or 350% or whatever.

I'm not even sure where the 7% comes from as in rough figures increasing the number of years a pension would be paid (given average life expectancy) from 20 years to 25 years requires a 25% increase in funding not the well over 100% you claim.

This argument is crazy, it'a all there in jamesd's post.

• Increase in pensioners by 25% (average pension paid for 20 years from 65, so 25 years from 60)
• Current rate of NI is 12% employee, 13.8% employer > 25.8% total.
• 25% of 25.8% = 6.45%, rounded up to " increase by 7%"
• So employee NI could go from 12%/2% to 18.45%/8.45%, or employee to 15%/2.5% and employer to 17.25% or any permutation that works for whatever point you're trying to make.
  

It's only if you conflate employee & employer NI that you can come up with this crazy 7% ie an increase of almost 60%).To increase the overall NI take by 25% it is only necessary for the employee NI rate to increase from 12% to 15% (2% to 2.25% for upper band income) & likewise for the employer rate.

nigelbb

zagfles said:

nigelbb said:

zagfles said:

nigelbb said:

Silvertabby said:

nigelbb said:

jamesd said:

nigelbb said:

jamesd said:

A crude look at the financial cost. It's roughly a 25% increase in pensioners and since the state pension is paid for out of the NI from working people that implies a 25% increase in NI. NI today is largely 12% employee and 13.8% employer for a combined 25.8% so the result would be an increase in NI of around 7%.

This ignores the reduced number of workers from earlier retiring, the different NI rates and the use of some NI for the NHS and working age benefits but it gives a reasonable if crude idea of how much the proposal would hurt workers. Young workers are likely to be particularly badly affected by the reduced take home pay or employers deciding that the higher NI makes some of them not worth employing.

Sounds good to me. If earning £100K per year you would only pay about £410 extra National Insurance per year. 

7% of the portion above the higher rate threshold is around £3,500. On top of the extra 7% on most of the part below that. Unless employers are made to pay some of it.

I don't know where you get your figures from but according to https://www.thesalarycalculator.co.uk on a salary of £100K the amount of NI paid per year is £ 5,878.84. I make 7% of that £406.

But wouldn't it be an extra 7% from the salary, not just the existing NI?

I was responding to the the claim that this proposal would require an increase in NI of around 7%. In fact I see now it's not a 7% increase but 25% that is required.

I still think that for someone earning £100K per year to pay an extra £1,500 per year to be able to draw their state pension at 60 is a great deal.

It's blatently obvious that he was referring to NI rates, not take, being increased by 7%, eg employee rates going from 12%/2% to 19%/9%. That would be a £6330 increase for someone on £100k.

No. Increasing a rate by 7% is increasing it by 7% not by 60% or 350% or whatever.

I'm not even sure where the 7% comes from as in rough figures increasing the number of years a pension would be paid (given average life expectancy) from 20 years to 25 years requires a 25% increase in funding not the well over 100% you claim.

Look up how NI works. If you increase the employee rates by 7% as suggested (that's the rates, not the amounts), then the increase in amount paid for higher earners would be far more than lower earners.

You don't need to increase the employee rates by 60%. Just proportionately increase bother employee & employer rates by 25%. For someone earning £100K that's under £30 per week. I would have happily paid that to get my state pension five years early.

nigelbb

jamesd said:

nigelbb said:

No. Increasing a rate by 7% is increasing it by 7% not by 60% or 350% or whatever.

I'm not even sure where the 7% comes from as in rough figures increasing the number of years a pension would be paid (given average life expectancy) from 20 years to 25 years requires a 25% increase in funding not the well over 100% you claim.

I wrote an increase by 25% which is about a rate increase by 7%. Here's the original paragraph since you seem to have missed the 25% part of it:

"It's roughly a 25% increase in pensioners and since the state pension is paid for out of the NI from working people that implies a 25% increase in NI. NI today is largely 12% employee and 13.8% employer for a combined 25.8% so the result would be an increase in NI of around 7%."

As should be clear a percentage increase of 25% on a base rate of 25.8% is 6 or 7% depending on how you want to approximate. However, for additional clarity I've now edited that paragraph to say:

"A crude look at the financial cost. It's roughly a 25% increase in pensioners and since the state pension is paid for out of the NI from working people that implies a 25% increase in NI. NI today is largely 12% employee and 13.8% employer for a combined 25.8% so the result would be an increase in NI to 32.25%. In the higher rate 2% plus 13.8% it'd rise to 19.75 but I think it'd be politically intolerable to have higher earners getting a lower increase so I think it might be done by ceasing to have the NI upper earnings limit align with higher rate tax and move it higher so some higher rate income tax money gets the combined 32.25% NI."

It's not just an increase in number of years paid. As the post said it's roughly a 25% increase in the number of people getting paid the pension, from 66 to death to 60 to death. If you want to refine that crude number you can check the population in those age ranges to get a more accurate figure.

The point is that if you increase the number of pensioners by around 25% then somehow the NI take is going to need increasing by about the same proportion and that's going to be painful for the working population.

Why do you think that the NI increase should disproportionately fall on the employee? If the overall take must increase by 25% then the employee rates need to change from 12% & 2% to 15% & 2.5%. Returning to my example of someone on £100K their NI payment would increase by under £30/week which I would certainly have been happy to pay for the promise of my state pension at 60.

nigelbb

zagfles said:

nigelbb said:

zagfles said:

nigelbb said:

Silvertabby said:

nigelbb said:

jamesd said:

nigelbb said:

jamesd said:

A crude look at the financial cost. It's roughly a 25% increase in pensioners and since the state pension is paid for out of the NI from working people that implies a 25% increase in NI. NI today is largely 12% employee and 13.8% employer for a combined 25.8% so the result would be an increase in NI of around 7%.

This ignores the reduced number of workers from earlier retiring, the different NI rates and the use of some NI for the NHS and working age benefits but it gives a reasonable if crude idea of how much the proposal would hurt workers. Young workers are likely to be particularly badly affected by the reduced take home pay or employers deciding that the higher NI makes some of them not worth employing.

Sounds good to me. If earning £100K per year you would only pay about £410 extra National Insurance per year. 

7% of the portion above the higher rate threshold is around £3,500. On top of the extra 7% on most of the part below that. Unless employers are made to pay some of it.

I don't know where you get your figures from but according to https://www.thesalarycalculator.co.uk on a salary of £100K the amount of NI paid per year is £ 5,878.84. I make 7% of that £406.

But wouldn't it be an extra 7% from the salary, not just the existing NI?

I was responding to the the claim that this proposal would require an increase in NI of around 7%. In fact I see now it's not a 7% increase but 25% that is required.

I still think that for someone earning £100K per year to pay an extra £1,500 per year to be able to draw their state pension at 60 is a great deal.

It's blatently obvious that he was referring to NI rates, not take, being increased by 7%, eg employee rates going from 12%/2% to 19%/9%. That would be a £6330 increase for someone on £100k.

No. Increasing a rate by 7% is increasing it by 7% not by 60% or 350% or whatever.

I'm not even sure where the 7% comes from as in rough figures increasing the number of years a pension would be paid (given average life expectancy) from 20 years to 25 years requires a 25% increase in funding not the well over 100% you claim.

Look up how NI works. If you increase the employee rates by 7% as suggested (that's the rates, not the amounts), then the increase in amount paid for higher earners would be far more than lower earners.

Why do you need to increase the employee rate by 60% from 12% to 19%? To fund the earlier pension requires taking an extra 25% in NI contributions so just increase current rates by 25% i.e. 12% & 2% to 15% & 2.5%. For someone earning £100K per year that's under £30/week. Who wouldn't be happy to pay that for the promise of a state pension at age 60?

Anonymous101

I'd be interested to hear to what degree state pension drives retirement.

Logically those in the lowest paid jobs are more likely to be able to retire if you pulled the state pension forward.

Regardless of the maths behind actually paying for the change, it seems the petition makes the fatal flaw of assuming that by moving the state pension age that would automatically result in a large number of openings which younger people are able to capitalise on.

Its a particular annoyance of mine that people refer to the state pension age as a "retirement age", there is no retirement age.

Bigphil1474

Not sure it will work, but on the flip side of the additional cost of the pension, is the savings in state benefits to people looking to get into work. With less people in work through retirement, there should be more jobs available to people who want one. I don't have any figures to hand, but idea's like this have merit in exploration until such time as they are deemed unworkable IMO. I for one would be happy to pay more NI contributions if it means I can access my stat pension at 60 rather than 67 (for me), and I would suspect many would. 
Also worth noting that NI is not exclusively for pensions, so the extra cost is likely to be more than the figures suggested above.

QrizB

Bigphil1474 said:

Not sure it will work, but on the flip side of the additional cost of the pension, is the savings in state benefits to people looking to get into work. With less people in work through retirement, there should be more jobs available to people who want one.

That is not how the economy works. More workers = more work. Quoting myself from page 1 of the thread:

QrizB said:

Can I point you to the Lump of Labour Fallacy for a good explanation of why it wouldn't work, even if the UK had a spare £185bn to pay these extra pensions.

If it helps, consider that a certain percentage of unemployed people won't sit at home reading The Guardian (or whatever it is you imagine them doing) and will instead start small businesses supplying goods and services. These are new jobs and new employers that wouldn't have existed if the people starting them hadn't been unemployed in the first place.

zagfles

nigelbb said:

zagfles said:

nigelbb said:

zagfles said:

nigelbb said:

Silvertabby said:

nigelbb said:

jamesd said:

nigelbb said:

jamesd said:

A crude look at the financial cost. It's roughly a 25% increase in pensioners and since the state pension is paid for out of the NI from working people that implies a 25% increase in NI. NI today is largely 12% employee and 13.8% employer for a combined 25.8% so the result would be an increase in NI of around 7%.

This ignores the reduced number of workers from earlier retiring, the different NI rates and the use of some NI for the NHS and working age benefits but it gives a reasonable if crude idea of how much the proposal would hurt workers. Young workers are likely to be particularly badly affected by the reduced take home pay or employers deciding that the higher NI makes some of them not worth employing.

Sounds good to me. If earning £100K per year you would only pay about £410 extra National Insurance per year. 

7% of the portion above the higher rate threshold is around £3,500. On top of the extra 7% on most of the part below that. Unless employers are made to pay some of it.

I don't know where you get your figures from but according to https://www.thesalarycalculator.co.uk on a salary of £100K the amount of NI paid per year is £ 5,878.84. I make 7% of that £406.

But wouldn't it be an extra 7% from the salary, not just the existing NI?

I was responding to the the claim that this proposal would require an increase in NI of around 7%. In fact I see now it's not a 7% increase but 25% that is required.

I still think that for someone earning £100K per year to pay an extra £1,500 per year to be able to draw their state pension at 60 is a great deal.

It's blatently obvious that he was referring to NI rates, not take, being increased by 7%, eg employee rates going from 12%/2% to 19%/9%. That would be a £6330 increase for someone on £100k.

No. Increasing a rate by 7% is increasing it by 7% not by 60% or 350% or whatever.

I'm not even sure where the 7% comes from as in rough figures increasing the number of years a pension would be paid (given average life expectancy) from 20 years to 25 years requires a 25% increase in funding not the well over 100% you claim.

Look up how NI works. If you increase the employee rates by 7% as suggested (that's the rates, not the amounts), then the increase in amount paid for higher earners would be far more than lower earners.

Why do you need to increase the employee rate by 60% from 12% to 19%? To fund the earlier pension requires taking an extra 25% in NI contributions so just increase current rates by 25% i.e. 12% & 2% to 15% & 2.5%. For someone earning £100K per year that's under £30/week. Who wouldn't be happy to pay that for the promise of a state pension at age 60?

Why are you using the example of someone on £100k, who due to the regressive nature of NI pays a much lower % of income in NI than lower earners? And assuming all rates would rise in the same proportion - the idea that would happen is ridiculous, it would be politically unacceptable.

As well as shafting low-mid earners, the young would be shafted by this - a regressive tax made even more regressive, no guarantee the same age would apply in 30-40 years times, and them having to pay the higher rates for decades while those in their late 50's only have to pay the higher rates for a few years.

Besides as everyone knows, when you start raising taxes the incentive to avoid them (legally and otherwise) increases. People will start doing a lot more sal sac, working through ltd companies and paying themselves in dividends, umbrella companies etc. Incentives already there and being used of course, but this would increase them.

Also I don't think jamesd accounted for the loss of NI revenue from those aged 60+ (currently no employee NI above state pension age, and no NI on pensions)

Thrugelmir

Anonymous101 said:

Logically those in the lowest paid jobs are more likely to be able to retire if you pulled the state pension forward.

I'd say it's it's the reverse. 

Thrugelmir

Bigphil1474 said:

Not sure it will work, but on the flip side of the additional cost of the pension, is the savings in state benefits to people looking to get into work. With less people in work through retirement, there should be more jobs available to people who want one. I don't have any figures to hand, but idea's like this have merit in exploration until such time as they are deemed unworkable IMO. I for one would be happy to pay more NI contributions if it means I can access my stat pension at 60 rather than 67 (for me), and I would suspect many would. 
.

Look at the demographics of the population. As is the case with the majority of the Western world. It's ageing.  Fewer workers to support those in retirement.