Triple Lock Becomes Double Lock For 1 Year

itwasntme001

zagfles said:

german_keeper said:

jamesd said:

Personally I'd rather see some split between NI to cover the younger ages portion and inheritance taxation for the older bit, since you can't spend money when you're dead already and it's one of the least painful taxes for the money owners that there can be.

I find it interesting that this is the only mention of the sacrosanct inheritance tax I have seen, and an opinion I completely agree with. Nothing on telly, newspapers, general chit chat either. It just confirms to me how far out of step I am with my opinions on IHT compared to the vast majority of the population. 

The current system for paying for care is like inheritance tax, puting a charge on your house to pay for care costs, as was Theresa May's so-called "dementia tax" proposal which went down like a lead balloon at the 2017 election. The new proposal still has an "inheritance tax" element but capped at £86k

How does it work exactly if a married couple own a home and one of them needs care.  So the other still stays living in the home.  Can they really put a charge against the home?  What interest rate and when does this charge need to be paid?  Only once the remaining person sells the home (including after death through probate etc)?

What happens if a child of the couple is also staying (and stays on after both parents die).  The charge remains (without interest or repayments due) until the child decides to move out and sell the house at which point the charge is paid off?

xylophone

https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/do-i-have-to-sell-my-home-to-pay-for-care/

If your care home is permanent, it won't be counted if it's still occupied by:

• your partner or former partner, unless they are estranged from you

• your estranged or divorced partner IF they are also a lone parent

• a relative who is aged 60 or over

• a relative who is disabled

• a child of yours aged under 18

  
  

jbrassy

Personally I find the whole debate around the tax and benefit system and the attitude of some baby boomers quite depressing. Most people seem to believe that when we pay NI, it goes into some pot which is saved for the future for when they retire. The reality is, our tax and benefit system is pay as you go. That is, people working today are paying for today's retirees and their state pension and people who are retired today paid for retirees back when they were working. 

The state pension under a pay as you go taxation system is a giant Ponzi scheme. As the population grows and more and more people retire, you need more working age people to pay for it. Unfortunately, the birth rate has declined significantly and voters generally find immigration unpalatable, so it's inevitably going to lead to tax rises or cuts in other areas of Government to pay for it. 

I think a lot of retired people do not understand how lucky they are. They get this triple (now double) locked state pension, winter fuel allowance, free TV licence, free prescriptions (in some regions), and free bus pass (I'm sure I've missed something). Further, they lived through a period of affordable housing which has now risen in value consistently which has granted them substantial wealth. Meanwhile, someone entering the labour market from Uni now has to effectively pay a 9% tax with their student loan (which boomers didn't have to pay) and this 1.25% rise in NI in order to allow pensioners to keep their homes which young people can't afford. In fact, there was an article in the FT earlier this week that explained for every £1000 pay increase that a graduate receives over £30k, just under 50% will be taken away through taxes and student loan.

I strongly doubt I will receive the level of support that retirees today receive when I retire because it is not affordable over the long term.

I'm not diminishing the fact that some pensioners struggle and live in poverty and the state should support those people. However, I think the summation of all these policies is nothing more than a huge bribe to the older generation to get them to vote one way or another. 

itwasntme001

jbrassy said:

Personally I find the whole debate around the tax and benefit system and the attitude of some baby boomers quite depressing. Most people seem to believe that when we pay NI, it goes into some pot which is saved for the future for when they retire. The reality is, our tax and benefit system is pay as you go. That is, people working today are paying for today's retirees and their state pension and people who are retired today paid for retirees back when they were working. 

The state pension under a pay as you go taxation system is a giant Ponzi scheme. As the population grows and more and more people retire, you need more working age people to pay for it. Unfortunately, the birth rate has declined significantly and voters generally find immigration unpalatable, so it's inevitably going to lead to tax rises or cuts in other areas of Government to pay for it. 

I think a lot of retired people do not understand how lucky they are. They get this triple (now double) locked state pension, winter fuel allowance, free TV licence, free prescriptions (in some regions), and free bus pass (I'm sure I've missed something). Further, they lived through a period of affordable housing which has now risen in value consistently which has granted them substantial wealth. Meanwhile, someone entering the labour market from Uni now has to effectively pay a 9% tax with their student loan (which boomers didn't have to pay) and this 1.25% rise in NI in order to allow pensioners to keep their homes which young people can't afford. In fact, there was an article in the FT earlier this week that explained for every £1000 pay increase that a graduate receives over £30k, just under 50% will be taken away through taxes and student loan.

I strongly doubt I will receive the level of support that retirees today receive when I retire because it is not affordable over the long term.

I'm not diminishing the fact that some pensioners struggle and live in poverty and the state should support those people. However, I think the summation of all these policies is nothing more than a huge bribe to the older generation to get them to vote one way or another. 

These are exactly my thoughts also.  But I wonder how many in the younger generations (than the BB) are set to receive (or already received) gifts and inheritances (and how much).  I suspect quite a bit (in numbers and quantity), which is one of the reasons why house prices are rising.  Although certainly not the only reason - I feel a lot of pressure on housing is because of its inefficiencies.  You have many boomers (and the older gen) occupying much more housing space than they actually need.  Their children have "flown the nest", their partners may have passed away, whilst the younger generation are looking for the same housing the BB gen are hoarding in order to have and raise children.

How can you raise children in a small one or two bed home, if that's all you can afford?  Maybe you can have one child.  But any more and it gets cramped very quickly.  Maybe a reason (out of many) for low birth rates.

jamesd

jbrassy said:

Personally I find the whole debate around the tax and benefit system and the attitude of some baby boomers quite depressing.

Presumably the ones who disagree with you even though it'll be another ten years for the last of the boomers reaches their state pension age?

You probably missed the substantial cut in state pension for workers that was carried out in 2016. It was done by eliminating the earnings-related part of the state pension which caused a low paid worker with full work history to get around £190 a week when the new state pension maximum was set at £155 a week. As a result that low paid worker will have received only triple lock increases since 2016 when before their continued work from then and perhaps for the next ten years will no longer get them earnings-relate increases. If in 2016 they had more than the cap they keep the extra but it only increases with CPI.

That's one of the things that over the years has been done to make the state pension affordable and of course you are likely to feel the full effect since you probably don't have more than the single tier cap already and will end up capped there.

Another change back in 2016 helped to make the pension benefits more affordable in a different way. The minimum income guarantee means tested benefit that is paid via pension credit is funded out of general taxation, not NI. By increasing the accrual for credits more people have been lifted above the means test level with the cost for that coming out of NI since the increase in credit value is part of the state pension.

Add in the age increases and you shouldn't expect the state pension to become unaffordable because the changes needed to prevent that have already been made. The fundamental examination of what was necessary was done back around 2003 by the Turner Pensions Commission and governments of all parties in power since then have proceeded with them.

You're right about university cost but you missed something: at around the tail of the baby boom age it was about 25-30% of the UK 18 year old population that could go to university. A substantial part of the reason for the funding change is the large increases since then, with those who benefit from the education opportunity paying the cost instead of fully general taxation, though of course many people never pay off their full loan.

Winter fuel allowance is paid to cut the number of old people dying in winter and it has worked. Death from normal winter cold is an age-related risk so it's not useful to do the same for working age people.

Almost 90% of English prescriptions are free, 63% of items being for those over 60. Those on working age benefits or with some long term medical conditions and many others including healthy young people get them free, not just over 60s (there's a consultation to increase that from 60 to state pension age that just finished). What should be apparent from that is that need for prescriptions is age-related and that as a society we've liked to help both our young and old people with free treatment.

jbrassy

jamesd said:

jbrassy said:

Personally I find the whole debate around the tax and benefit system and the attitude of some baby boomers quite depressing.

Presumably the ones who disagree with you even though it'll be another ten years for the last of the boomers reaches their state pension age?

You probably missed the substantial cut in state pension for workers that was carried out in 2016. It was done by eliminating the earnings-related part of the state pension which caused a low paid worker with full work history to get around £190 a week when the new state pension maximum was set at £155 a week. As a result that low paid worker will have received only triple lock increases since 2016 when before their continued work from then and perhaps for the next ten years will no longer get them earnings-relate increases. If in 2016 they had more than the cap they keep the extra but it only increases with CPI.

That's one of the things that over the years has been done to make the state pension affordable and of course you are likely to feel the full effect since you probably don't have more than the single tier cap already and will end up capped there.

Another change back in 2016 helped to make the pension benefits more affordable in a different way. The minimum income guarantee means tested benefit that is paid via pension credit is funded out of general taxation, not NI. By increasing the accrual for credits more people have been lifted above the means test level with the cost for that coming out of NI since the increase in credit value is part of the state pension.

Add in the age increases and you shouldn't expect the state pension to become unaffordable because the changes needed to prevent that have already been made. The fundamental examination of what was necessary was done back around 2003 by the Turner Pensions Commission and governments of all parties in power since then have proceeded with them.

You're right about university cost but you missed something: at around the tail of the baby boom age it was about 25-30% of the UK 18 year old population that could go to university. A substantial part of the reason for the funding change is the large increases since then, with those who benefit from the education opportunity paying the cost instead of fully general taxation, though of course many people never pay off their full loan.

Winter fuel allowance is paid to cut the number of old people dying in winter and it has worked. Death from normal winter cold is an age-related risk so it's not useful to do the same for working age people.

Almost 90% of English prescriptions are free, 63% of items being for those over 60. Those on working age benefits or with some long term medical conditions and many others including healthy young people get them free, not just over 60s (there's a consultation to increase that from 60 to state pension age that just finished). What should be apparent from that is that need for prescriptions is age-related and that as a society we've liked to help both our young and old people with free treatment.

Thanks. That is genuinely very interesting. However, it still doesn't get over the inherent unfairness in a lot of this. A lot of working age people are paying large (and increasing) amounts of tax to fund and sustain the wealth of pensioners at levels that cannot be achieved by these working people. The proposed changes to NI and social care will only make this worse.

Personally, I would like to see income tax and NI decreased and the short fall made up by introducing a wealth tax. This would be paid annually by homeowners and the amount paid in tax would be determined by the value of their homes. This could go a long way to solving intergenerational (and other forms) of inequality in this country and ensure house price increases do not accelerate at a rate which is unsustainable. 

zagfles

jbrassy said:

jamesd said:

jbrassy said:

Personally I find the whole debate around the tax and benefit system and the attitude of some baby boomers quite depressing.

Presumably the ones who disagree with you even though it'll be another ten years for the last of the boomers reaches their state pension age?

You probably missed the substantial cut in state pension for workers that was carried out in 2016. It was done by eliminating the earnings-related part of the state pension which caused a low paid worker with full work history to get around £190 a week when the new state pension maximum was set at £155 a week. As a result that low paid worker will have received only triple lock increases since 2016 when before their continued work from then and perhaps for the next ten years will no longer get them earnings-relate increases. If in 2016 they had more than the cap they keep the extra but it only increases with CPI.

That's one of the things that over the years has been done to make the state pension affordable and of course you are likely to feel the full effect since you probably don't have more than the single tier cap already and will end up capped there.

Another change back in 2016 helped to make the pension benefits more affordable in a different way. The minimum income guarantee means tested benefit that is paid via pension credit is funded out of general taxation, not NI. By increasing the accrual for credits more people have been lifted above the means test level with the cost for that coming out of NI since the increase in credit value is part of the state pension.

Add in the age increases and you shouldn't expect the state pension to become unaffordable because the changes needed to prevent that have already been made. The fundamental examination of what was necessary was done back around 2003 by the Turner Pensions Commission and governments of all parties in power since then have proceeded with them.

You're right about university cost but you missed something: at around the tail of the baby boom age it was about 25-30% of the UK 18 year old population that could go to university. A substantial part of the reason for the funding change is the large increases since then, with those who benefit from the education opportunity paying the cost instead of fully general taxation, though of course many people never pay off their full loan.

Winter fuel allowance is paid to cut the number of old people dying in winter and it has worked. Death from normal winter cold is an age-related risk so it's not useful to do the same for working age people.

Almost 90% of English prescriptions are free, 63% of items being for those over 60. Those on working age benefits or with some long term medical conditions and many others including healthy young people get them free, not just over 60s (there's a consultation to increase that from 60 to state pension age that just finished). What should be apparent from that is that need for prescriptions is age-related and that as a society we've liked to help both our young and old people with free treatment.

Thanks. That is genuinely very interesting. However, it still doesn't get over the inherent unfairness in a lot of this. A lot of working age people are paying large (and increasing) amounts of tax to fund and sustain the wealth of pensioners at levels that cannot be achieved by these working people. The proposed changes to NI and social care will only make this worse.

Personally, I would like to see income tax and NI decreased and the short fall made up by introducing a wealth tax. This would be paid annually by homeowners and the amount paid in tax would be determined by the value of their homes. This could go a long way to solving intergenerational (and other forms) of inequality in this country and ensure house price increases do not accelerate at a rate which is unsustainable. 

You realise that lots of pensioners have expensive homes but low income, right? Same with low income families, who need a big home. Where are they supposed to find the money to pay this tax?

It would be better to apply CGT to owner occupied, with roll forwards, then people can pay when they actually benefit from their house increasing in value.

The value of your house increasing while you need it to live in it doesn't actually make you richer you know. Even if headlines in rags like the Express imply otherwise. Your cost of living is increasing at the same time as your asset.

Audaxer

zagfles said:

Ganga said:

zagfles said:

lauran1902 said:

The fact that some previous uplifts have been more 'generous' than expected doesn't compensate for that fact.  My pension is £8700 per year.  That's all.  I have a very small occupational pension of about the same amount.  Would any one of you who are working like to try and live on that, especially with rising prices all round? 

So you have about £17k income? Or have I misunderstood? Some couples spend less than that, even though they could afford to spend more. Read the "squirrelled nuts" thread here.

Whilst i agree with you ,a lot of the people on the " Squirreled nuts thread " have in excess of half a million quid and a lot have more ,their worries are exceeding the LTA .

Yes. That's the point. Like the OP of that thread who has over half a million but who only spends about £13k (IIRC) between her and her OH.

Like it's some sort of challenge to live on £17k  Many here live on less and not through necessity. 

We are retired with no mortgage, but we as a couple, couldn't live on £17k per year. Not including big spend items which are necessary from time to time, the minimum annual spend we can manage is around £24k. I know there are retirees on here that live on a lot less, and not through necessity, but I don't know how they manage it, because we are by no means big spenders.

zagfles

Audaxer said:

zagfles said:

Ganga said:

zagfles said:

lauran1902 said:

The fact that some previous uplifts have been more 'generous' than expected doesn't compensate for that fact.  My pension is £8700 per year.  That's all.  I have a very small occupational pension of about the same amount.  Would any one of you who are working like to try and live on that, especially with rising prices all round? 

So you have about £17k income? Or have I misunderstood? Some couples spend less than that, even though they could afford to spend more. Read the "squirrelled nuts" thread here.

Whilst i agree with you ,a lot of the people on the " Squirreled nuts thread " have in excess of half a million quid and a lot have more ,their worries are exceeding the LTA .

Yes. That's the point. Like the OP of that thread who has over half a million but who only spends about £13k (IIRC) between her and her OH.

Like it's some sort of challenge to live on £17k  Many here live on less and not through necessity. 

We are retired with no mortgage, but we as a couple, couldn't live on £17k per year. Not including big spend items which are necessary from time to time, the minimum annual spend we can manage is around £24k. I know there are retirees on here that live on a lot less, and not through necessity, but I don't know how they manage it, because we are by no means big spenders.

Well, you clearly are compared to couples who live on £13k

Our normal spending on a family of 4 is about £30-35k (ex mortgage), but in the 2020/21 tax year I worked out we spent about £21k, this was with 2 kids "at uni" but who were with us most of that time for obvious reasons, so 4 people.  We had 1 foreign holiday and 2 UK ones, way below our usual quota (2019/20 we had 6 foreign holidays!)

So I'd say £17k is easily doable for a couple, let alone a single person, and £13k possible if you don't drink alcohol or eat meat etc.

Audaxer

zagfles said:

Audaxer said:

zagfles said:

Ganga said:

zagfles said:

lauran1902 said:

The fact that some previous uplifts have been more 'generous' than expected doesn't compensate for that fact.  My pension is £8700 per year.  That's all.  I have a very small occupational pension of about the same amount.  Would any one of you who are working like to try and live on that, especially with rising prices all round? 

So you have about £17k income? Or have I misunderstood? Some couples spend less than that, even though they could afford to spend more. Read the "squirrelled nuts" thread here.

Whilst i agree with you ,a lot of the people on the " Squirreled nuts thread " have in excess of half a million quid and a lot have more ,their worries are exceeding the LTA .

Yes. That's the point. Like the OP of that thread who has over half a million but who only spends about £13k (IIRC) between her and her OH.

Like it's some sort of challenge to live on £17k  Many here live on less and not through necessity. 

We are retired with no mortgage, but we as a couple, couldn't live on £17k per year. Not including big spend items which are necessary from time to time, the minimum annual spend we can manage is around £24k. I know there are retirees on here that live on a lot less, and not through necessity, but I don't know how they manage it, because we are by no means big spenders.

Well, you clearly are compared to couples who live on £13k

Our normal spending on a family of 4 is about £30-35k (ex mortgage), but in the 2020/21 tax year I worked out we spent about £21k, this was with 2 kids "at uni" but who were with us most of that time for obvious reasons, so 4 people.  We had 1 foreign holiday and 2 UK ones, way below our usual quota (2019/20 we had 6 foreign holidays!)

So I'd say £17k is easily doable for a couple, let alone a single person, and £13k possible if you don't drink alcohol or eat meat etc.

Well, we hardly ever buy alcohol and we have not eaten out for the last 18 months, and had only one week's holiday in the UK. We have two cars, but they are not new and both are paid for, but we still couldn't manage on £17k a year.