Pension chat

sevenhills

IanManc said:

Alternatively, people are equally free to believe that the UK state pension is "generous": a view based entirely on their own ill informed prejudices.

People can believe what they want, but if they feel the state pension is insufficient, they have a few decades to contribute to workplace or private pensions. Tax relief can be generous.

TheBanker

Essentially how much we can pay pensioners depends on how much National Insurance (or other taxes) the working population is able and prepared to pay. State pensions could be increased, or the retirement age lowered, if the population was prepared to vote for a party with a manifesto commitment to increase NI contributions to pay for it. Alternatively an increase could be funded by reducing other budgets such as the NHS or education. But as an ex-prime minister once famously said, 'there's no magic money tree.'

In my view the state pension should not be 'generous'. It should be sufficient to cover living costs (taking into account other benefits like Pension Credit that are available, free prescriptions and bus travel etc). People who wish to enjoy holidays or other luxuries in retirement need to make their own provision, through private pensions. The government provides generous tax incentives to do so.

As a higher earner, I pay a lot of tax and NI. I don't object to paying what may appear to be more than my fair share. I like living in a country where we have universal access to healthcare (despite the current issues with the NHS). I like living in a country where I know that people who cannot work due will not starve to death. And I like living in a country where we are able to make sure all pensioners receive a basic level of income. But I really don't want to pay more tax, especially if this would be used to fund two weeks in the Costa Del Sol for someone who never got around to making their own arrangements for their retirement.

Albermarle

RG2015 said:

Band7 said:

oz0707 said:

Ltd company owners/directors can also get the NI credits for minimal NI payments, but then again they pay a lot of corp tax. It's all one big pot really.

It's actually not all one big pot. State pensions are generally paid from NI contributions only. There is a provision for a Treasury Grant from general taxation if there is a shortfall (as was last the case about 8 years ago) but the NI contributions are administered and accounted for separately from all other tax income.

I wasn't aware of that and have to say I find it surprising.

What else does NI contributions pay for, and are the annual calculations available anywhere?

National Insurance Fund Accounts - GOV.UK (www.gov.uk)

Band7

TheBanker said:

Essentially how much we can pay pensioners depends on how much National Insurance (or other taxes) the working population is able and prepared to pay. State pensions could be increased, or the retirement age lowered, if the population was prepared to vote for a party with a manifesto commitment to increase NI contributions to pay for it. Alternatively an increase could be funded by reducing other budgets such as the NHS or education. But as an ex-prime minister once famously said, 'there's no magic money tree.'

In my view the state pension should not be 'generous'. It should be sufficient to cover living costs (taking into account other benefits like Pension Credit that are available, free prescriptions and bus travel etc). People who wish to enjoy holidays or other luxuries in retirement need to make their own provision, through private pensions. The government provides generous tax incentives to do so.

As a higher earner, I pay a lot of tax and NI. I don't object to paying what may appear to be more than my fair share. I like living in a country where we have universal access to healthcare (despite the current issues with the NHS). I like living in a country where I know that people who cannot work due will not starve to death. And I like living in a country where we are able to make sure all pensioners receive a basic level of income. But I really don't want to pay more tax, especially if this would be used to fund two weeks in the Costa Del Sol for someone who never got around to making their own arrangements for their retirement.

Perfectly put 👍👍

MACKEM99

Most of those pensioners started work at 16 and retired at 65. Thats 50 years paying in.  Now that the vast majority start work at a later age what age should they retire?

Band7

housebuyer143 said:

RG2015 said:

Band7 said:

oz0707 said:

Ltd company owners/directors can also get the NI credits for minimal NI payments, but then again they pay a lot of corp tax. It's all one big pot really.

It's actually not all one big pot. State pensions are generally paid from NI contributions only. There is a provision for a Treasury Grant from general taxation if there is a shortfall (as was last the case about 8 years ago) but the NI contributions are administered and accounted for separately from all other tax income.

I wasn't aware of that and have to say I find it surprising.

What else does NI contributions pay for, and are the annual calculations available anywhere?

Chat gpt states:

"According to the UK government, in the fiscal year 2019-2020, NI contributions raised a total of £146 billion. Of this amount, around £106 billion was spent on state pensions, while the remaining £40 billion was spent on other benefits and services, such as Jobseeker's Allowance, Employment and Support Allowance, and Maternity Allowance."

Chat GPT is, unsurprisingly, not quite correct. The vast majority of the remaining £40 billion, £26.5 billion to be exact, were actually spent on the NHS.

It is also somewhat off the mark to say that £106bn were spent on state pensions in 2019-2020 because the truth is that it was less than £99bn. But what's a few billion between friends.......

I will stick to the audited NI Fund accounts for my information, and give Chat GPT 0 out of 10.

Band7

State pensions, social security provisions, health and tax systems are a lot more complex than unverified Wikipedia and a HoC Library paper which ignores a lot of data, such as the actual average retirement ages, and poverty levels across the population. Neither of those two sources will do an incredibly complex subject justice, and nor will an MSE Forum thread that has gone way off topic - not least because of me objecting to the myths and bizarre claims in some of the posts.

Bravepants

housebuyer143 said:

RG2015 said:

Band7 said:

oz0707 said:

Ltd company owners/directors can also get the NI credits for minimal NI payments, but then again they pay a lot of corp tax. It's all one big pot really.

It's actually not all one big pot. State pensions are generally paid from NI contributions only. There is a provision for a Treasury Grant from general taxation if there is a shortfall (as was last the case about 8 years ago) but the NI contributions are administered and accounted for separately from all other tax income.

I wasn't aware of that and have to say I find it surprising.

What else does NI contributions pay for, and are the annual calculations available anywhere?

Chat gpt states:

"According to the UK government, in the fiscal year 2019-2020, NI contributions raised a total of £146 billion. Of this amount, around £106 billion was spent on state pensions, while the remaining £40 billion was spent on other benefits and services, such as Jobseeker's Allowance, Employment and Support Allowance, and Maternity Allowance."

Do you know where Chat GPT gets its information from, or is it not quite clever enough to cite references yet?

housebuyer143

Bravepants said:

housebuyer143 said:

RG2015 said:

Band7 said:

oz0707 said:

Ltd company owners/directors can also get the NI credits for minimal NI payments, but then again they pay a lot of corp tax. It's all one big pot really.

It's actually not all one big pot. State pensions are generally paid from NI contributions only. There is a provision for a Treasury Grant from general taxation if there is a shortfall (as was last the case about 8 years ago) but the NI contributions are administered and accounted for separately from all other tax income.

I wasn't aware of that and have to say I find it surprising.

What else does NI contributions pay for, and are the annual calculations available anywhere?

Chat gpt states:

"According to the UK government, in the fiscal year 2019-2020, NI contributions raised a total of £146 billion. Of this amount, around £106 billion was spent on state pensions, while the remaining £40 billion was spent on other benefits and services, such as Jobseeker's Allowance, Employment and Support Allowance, and Maternity Allowance."

Do you know where Chat GPT gets its information from, or is it not quite clever enough to cite references yet?

I asked it the question in a different way and got this more detailed answer. I asked it to cite it's source but this does seem too much for it at the moment, just said it was from ONS data and government websites.

Between 2010 and 2020, the UK government collected over £600 billion in National Insurance contributions. This money was used to fund a wide range of benefits and services, including:

1. State Pension: The largest portion of NI contributions was used to pay for the State Pension, which accounted for approximately 45% of the total expenditure.

2. National Health Service (NHS): A significant proportion of NI contributions was used to fund the NHS, which provides healthcare services to the UK population. In 2019-2020, around 20% of the total expenditure was spent on the NHS.

3. Employment and Support Allowance: This benefit was the third largest expenditure, accounting for around 5% of the total.

4. Maternity Allowance: This benefit accounted for around 2% of the total expenditure.

5. Jobseeker's Allowance and other benefits: The remaining portion of NI contributions was used to fund other social security benefits and services, including Jobseeker's Allowance and other support for those who are unemployed or on low incomes.

RG2015

@VNX

Nice one on the thread title change! 

Someone will probably moan now that its on the wrong Board.