Jeremy Hunt in plea to early retirees: ‘Britain needs you’

Fortnite_hero

NedS said:

Fortnite_hero said:

CoastingHatbox said:

Fortnite_hero said:

Hi

People on PT work and getting benefits should be pulled up more often for interviews and assessed why they cant work more hours.

One of the places I worked at years ago - not sure how it workd but she said something about " cant work more than 16 hours" -  - the reason she mentoned that was that a full time role for our admin had come up annd I was confused until someone enlightedn me.

Not sure how rules have changed since - btw, she had 2 kids aged around 10.

Agree with the above.

Brother in law is single with no dependants, he claims UC and has just had to work an extra 2 hours to a grand total of 14 per week.

Why are we paying UC to people who should be working full time. The criteria for UC should be X amount of hours per week not so many £ per week 

This would stop the "I can't work more than 16 hours as it effects my benefits nonsense.

The problem here is that wages have not kept pace with growth in GDP.
The problem isn't the welfare state itself. It is employers offering such poor wages people are worse off after working more hours.

A significant proportion of UC (and before that Tax Credits) is supporting employers that do not pay properly.

So the problem of people choosing to work 16 hours who could easily work full time is the fault of the employers..

You say it is not the fault of the benefits system, I would say it is entirely the fault of the welfare system that is allowing this to happen.

It should be noted that the 16h limit is something largely imposed by legacy benefits which are slowly being phased out and replaced by Universal Credit which does not have any such limits. Indeed, UC deliberately implements a system whereby working more will always result in a claimant being better off overall due to the tapered way benefits are withdrawn as earnings increase. Still, trying to explain that to claimants where views around 16h are deeply entrenched is sometimes difficult and it takes time to change behaviours. Childcare costs are also generously supported on UC, refunded at 85% of the cost.

True but UC has the amount you need to earn in a monetary value that equates to about 15 hours per week in the case of the brother in law.

So very similar to legacy benefits in that degree.

NedS

Fortnite_hero said:

NedS said:

Fortnite_hero said:

CoastingHatbox said:

Fortnite_hero said:

Hi

People on PT work and getting benefits should be pulled up more often for interviews and assessed why they cant work more hours.

One of the places I worked at years ago - not sure how it workd but she said something about " cant work more than 16 hours" -  - the reason she mentoned that was that a full time role for our admin had come up annd I was confused until someone enlightedn me.

Not sure how rules have changed since - btw, she had 2 kids aged around 10.

Agree with the above.

Brother in law is single with no dependants, he claims UC and has just had to work an extra 2 hours to a grand total of 14 per week.

Why are we paying UC to people who should be working full time. The criteria for UC should be X amount of hours per week not so many £ per week 

This would stop the "I can't work more than 16 hours as it effects my benefits nonsense.

The problem here is that wages have not kept pace with growth in GDP.
The problem isn't the welfare state itself. It is employers offering such poor wages people are worse off after working more hours.

A significant proportion of UC (and before that Tax Credits) is supporting employers that do not pay properly.

So the problem of people choosing to work 16 hours who could easily work full time is the fault of the employers..

You say it is not the fault of the benefits system, I would say it is entirely the fault of the welfare system that is allowing this to happen.

It should be noted that the 16h limit is something largely imposed by legacy benefits which are slowly being phased out and replaced by Universal Credit which does not have any such limits. Indeed, UC deliberately implements a system whereby working more will always result in a claimant being better off overall due to the tapered way benefits are withdrawn as earnings increase. Still, trying to explain that to claimants where views around 16h are deeply entrenched is sometimes difficult and it takes time to change behaviours. Childcare costs are also generously supported on UC, refunded at 85% of the cost.

True but UC has the amount you need to earn in a monetary value that equates to about 15 hours per week in the case of the brother in law.

So very similar to legacy benefits in that degree.

I think you are talking about something completely different - the threshold at which they are no longer required to attend appointments. The taper rate at which UC payments reduce does not change so the reduction is linear with earnings (excepting any work allowance).

badmemory

If we aren't careful we are going to end up with a version of China's problem.  In China it was only being allowed one child, in this country it will be the middle classes deciding to have either no children or only one.  The reason being financial in the case of the couple & employment progression in the case of the child bearer.  Then they will be begging people to have children, well what they would class as the correct type of children.  They need to think things through & make those thoughts about more than what is going to happen in the next 5 years.  Long term strategy - absolutely no chance of that happening.

Fortnite_hero

NedS said:

Fortnite_hero said:

NedS said:

Fortnite_hero said:

CoastingHatbox said:

Fortnite_hero said:

Hi

People on PT work and getting benefits should be pulled up more often for interviews and assessed why they cant work more hours.

One of the places I worked at years ago - not sure how it workd but she said something about " cant work more than 16 hours" -  - the reason she mentoned that was that a full time role for our admin had come up annd I was confused until someone enlightedn me.

Not sure how rules have changed since - btw, she had 2 kids aged around 10.

Agree with the above.

Brother in law is single with no dependants, he claims UC and has just had to work an extra 2 hours to a grand total of 14 per week.

Why are we paying UC to people who should be working full time. The criteria for UC should be X amount of hours per week not so many £ per week 

This would stop the "I can't work more than 16 hours as it effects my benefits nonsense.

The problem here is that wages have not kept pace with growth in GDP.
The problem isn't the welfare state itself. It is employers offering such poor wages people are worse off after working more hours.

A significant proportion of UC (and before that Tax Credits) is supporting employers that do not pay properly.

So the problem of people choosing to work 16 hours who could easily work full time is the fault of the employers..

You say it is not the fault of the benefits system, I would say it is entirely the fault of the welfare system that is allowing this to happen.

It should be noted that the 16h limit is something largely imposed by legacy benefits which are slowly being phased out and replaced by Universal Credit which does not have any such limits. Indeed, UC deliberately implements a system whereby working more will always result in a claimant being better off overall due to the tapered way benefits are withdrawn as earnings increase. Still, trying to explain that to claimants where views around 16h are deeply entrenched is sometimes difficult and it takes time to change behaviours. Childcare costs are also generously supported on UC, refunded at 85% of the cost.

True but UC has the amount you need to earn in a monetary value that equates to about 15 hours per week in the case of the brother in law.

So very similar to legacy benefits in that degree.

I think you are talking about something completely different - the threshold at which they are no longer required to attend appointments. The taper rate at which UC payments reduce does not change so the reduction is linear with earnings (excepting any work allowance).

Yes it's the amount he no longer has the Job centre hassling him.

He says he's quite happy working 15 hours, still getting a fair bit of UC and his HB paid.

Such an easy item to fix as many of tax loopholes are but needs a government willing to do it.  This would then leave more money for the services we need.  I think any government going forward will have to look at these things as the days of free everything will soon be long gone.

bostonerimus

zagfles said:

bostonerimus said:

OldScientist said:

EdSwippet said:

OldScientist said:

Quite... so, I had a salary that, in the latter part of my career was in the top 10% in the UK and, accounted for properly, I won't have paid for my state pension.

Even if you include employer NICs? Those shift the needle a lot, since they never top out.

They are after all a portion of your overall 'compensation' package. That is, if your employer did not have to hand this part of what they make from your efforts over directly to the government, they could instead have paid you a higher salary.

As far as I am aware, the values in the NI record only include the personal ones so I've not included the employer ones.

A full lifetime calculation on the paying in side would include NI, tax, etc. while the outgoings would include pension, use of NHS, roads, schools, etc. In other words, it deserves a far better treatment than a casual post to a forum (if it deserves a treatment at all)!  I am minded of what is written on the US IRS building, "Taxes are what we pay for a civilized society" - simple accounting of money in an out ignores the benefits everyone gets.

I note that the ONS report (https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/theeffectsoftaxesandbenefitsonhouseholdincome/financialyearending2021 ) suggesting that just over half gain more in benefits than are taxed (in 2021, the figures were skewed by covid, previously it was just under half) is an instantaneous measure and not a lifetime one.

Various OECD reports have identified the UK SP as one of the worst values for money in the developed world. The benefit just isn't very much for the level of contributions. Of course it's complicated as NI pays for more than SP and cross border comparisons are difficult.

However, for those paying Class 2 NI the UK flat rate SP is a fantastic deal; 35 years of voluntary NI has cost me around £6k and for that I'll get get full SP at age 67. The US equivalent of SP is Social Security and that will pay me 3x the UK SP. It is funded by a 15.3% payroll tax split equally between the employer and the employee, so 7.65% each, and has a lifetime earnings component.

The "value for money" of the state pension varies massively with income, for those on low incomes it's fantastic value for money, for those on higher incomes it's not.

For instance under today's rules, someone could earn £12,000 a year for 35 years and pay zero NI, and get a full state pension of about £10k a year! You can't get much better value than that!

Whereas someone earning £50k a year for 45 years would pay almost £500,000 in NI (inc employer conts), and get exactly the same state pension, £10k a year.  Not great value for money.

The old rules were even worse, I remember a time when I was paying 20 times as much NI as my wife, but she was accruing more state pension than me!!

The comparison of international schemes was done across income levels and looked at the percentage of income replaced by the state pensions. If you are on a low income then the SP will replace a large portion of your income, the flat rate pension removed the income related portion of the previous UK SP. Other countries also have allowances and thresholds where taxes start and often a progressive calculation of benefits. In the US the Social Security benefit is biased towards those on lower wages, but there is also a factor in the calculation that uses your yearly average lifetime earnings and number of contributions so higher earners get more...it's just not a linear increase over the benefit for a lower wage.

Nebulous2

Sea_Shell said:

Grumpy_chap said:

Sea_Shell said:

So, if me and a like minded neighbour, both became self employed cleaners, could we clean each others houses, charge each other £££ which would enable us to both pay reduced (class2?) voluntary NI contributions??

That can't be right (or legal?) Surely?

Erm, yes, that is how it is.

There are limits though.  A while back, there was someone who suggested employing their wife for domestic services at home.  The thread meandered as always but concluded that was not permitted.  IIRC, the suggestion was to pay from the individual's Ltd Co.

Having given it some more thought, of course that is exactly how it is.    That's commerce.

It does however mean that if you have a circle of services, all used by each other, say hairdresser, beautician, dog walker, then they can all get paid with the same £££, that just goes round and round.     

3 x £££ is then effectively GDP, everyone's a winner!!!?

I suppose that's why its called GROSS domestic product, not NET ? 

That's the great advantage of giving money to poor(er) people. It goes round and round the local community. I remember some research saying that if you give someone on benefits £100 they will spend over 70% of it within 3 miles of their home. If you give the same money to someone rich it either goes in the bank or goes overseas - foreign holiday, German car etc. 

That has been the great dilemma in creating handouts to stimulate the economy, getting it to people who will spend it. Japan is a good example, lots of attempts to stimulate spending for the last 30 years or more, with very limited success. 

MK62

bostonerimus said:

OldScientist said:

EdSwippet said:

OldScientist said:

Quite... so, I had a salary that, in the latter part of my career was in the top 10% in the UK and, accounted for properly, I won't have paid for my state pension.

Even if you include employer NICs? Those shift the needle a lot, since they never top out.

They are after all a portion of your overall 'compensation' package. That is, if your employer did not have to hand this part of what they make from your efforts over directly to the government, they could instead have paid you a higher salary.

As far as I am aware, the values in the NI record only include the personal ones so I've not included the employer ones.

A full lifetime calculation on the paying in side would include NI, tax, etc. while the outgoings would include pension, use of NHS, roads, schools, etc. In other words, it deserves a far better treatment than a casual post to a forum (if it deserves a treatment at all)!  I am minded of what is written on the US IRS building, "Taxes are what we pay for a civilized society" - simple accounting of money in an out ignores the benefits everyone gets.

I note that the ONS report (https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/theeffectsoftaxesandbenefitsonhouseholdincome/financialyearending2021 ) suggesting that just over half gain more in benefits than are taxed (in 2021, the figures were skewed by covid, previously it was just under half) is an instantaneous measure and not a lifetime one.

Various OECD reports have identified the UK SP as one of the worst values for money in the developed world. The benefit just isn't very much for the level of contributions and replaces a small portion of earned income. Of course it's complicated as NI pays for more than SP and cross border comparisons are difficult.

However, for those paying Class 2 NI the UK flat rate SP is a fantastic deal; 35 years of voluntary NI has cost me around £6k and for that I'll get get full SP at age 67. The US equivalent of SP is Social Security and that will pay me 3x the UK SP. It is funded by a 15.3% payroll tax split equally between the employer and the employee, so 7.65% each, and has a lifetime earnings component like the old SERPs. The US SS benefit isn't great when compared with other countries, but it is better than the UK's. For high levels of state pension you should live in the Netherlands or Denmark.

The US might have a higher headline SSec pension but then US retirees have something of a lottery of healthcare provision......you might be better off if you are healthy, perhaps not so much if you aren't.......it's this kind of thing which makes direct comparison of state pension provision, between different countries, very difficult. 

Universidad

jimi_man said:

 most people on here indulge in tax avoidance in one form or another.

I mean, this is the pensions forum. Every time you pay into a pension you're doing it!

Pat38493

Universidad said:

jimi_man said:

 most people on here indulge in tax avoidance in one form or another.

I mean, this is the pensions forum. Every time you pay into a pension you're doing it!

I've always struggled a bit with the term tax avoidance because there is no clear distinction between tax avoidance, and just doing what pretty much everyone does - paying into a pension is a classic example, especially in recent times where your employer is obliged to enroll you in a scheme unless you proactively opt out - how can it be tax avoidance if it's the law that you will be doing it by default?

How far do you want to go - if I decide not to buy a new car because I don't want to pay several grand of VAT and buy a 2nd hand one instead, is that tax avoidance?

There is no clear place to draw the line and I guess it will be a matter of opinion.

Malthusian

Pat38493 said:

I've always struggled a bit with the term tax avoidance because there is no clear distinction between tax avoidance, and just doing what pretty much everyone does - paying into a pension is a classic example, especially in recent times where your employer is obliged to enroll you in a scheme unless you proactively opt out - how can it be tax avoidance if it's the law that you will be doing it by default?

The fundamental problem here is that you are seeing "tax avoidance" as a negative, an accusation you have to defend yourself against. By definition, it isn't. Tax avoidance is legal, tax evasion is illegal. "No-one is obliged to order their affairs so that they pay more tax to the Government."
Both HMRC and tax evaders like to blur the lines. HMRC likes to talk about "abusive tax avoidance schemes" but as soon as these schemes fail they become tax evasion schemes. And the promoters of such schemes in turn claim their schemes are legitimate "tax avoidance". But it doesn't change reality.
If I walked up to you in the street and randomly punched you in the noggin, then claimed "it was self-defence guv", it wouldn't mean that the distinction between assault and self-defence is unclear.