Budget predictions / discussion

Martyn_H

Will any of these cuts matter when Council Tax is out of control? So much for the party of low taxation.

Swipe

When they lower NI does that mean it will be cheaper to buy missing years?

dealyboy

My prediction ... Jerry will raise the starting income tax and NI threshold from £12,570 to £20k.

Oh sorry ... what time is it? Have I been dreaming? 

subjecttocontract

Any predictions or changes are entirely acedemic. As I'm a true blue Conservative its highly likely to mean I will be better off following Wednesday's budget.

Albermarle

george4064 said:

These NI cuts (recently and chatter of another) does worry me, that the state pension is going to be cut.

Isn't it NI contributions that fund the state pension? I get a feeling that NI is getting cut because it might not be needed going forward, if state pension gets scrapped altogether.

NI nominally funds the state pension but the govt can shuffle funds around how it likes.
In fact normally each year the NI in is larger than the SP Out and the surplus is used to help pay other benefits.

As discussed on numerous other threads, people have been predicting the demise of the state pension for decades, whilst in fact it has been steadily going up in real terms.

It would be political suicide to reduce it/scrap it, so no Govt will do it.

friolento

george4064 said:

These NI cuts (recently and chatter of another) does worry me, that the state pension is going to be cut.

Isn't it NI contributions that fund the state pension? I get a feeling that NI is getting cut because it might not be needed going forward, if state pension gets scrapped altogether.

IMO, there is no near or medium term risk that state pension will be cut. The Triple Lock is already funded for the next few years because there is currently a substantial surplus in the NI Fund ( (£72.4 billion audited as of 31/03/2023, and anecdotally sitting at over £80 billion YTD), and the basic costs will be funded by ongoing NI contributions, provided the economy is ticking over on at least the mediocre basis it has been ticking over for the last few years.

The Triple Lock must be reviewed, and replaced with a more sustainable solution, in the next 5-8 years, and in the long run, the State Pension might well become means tested. All this is a long time away, and not on the current radar of any political party.

 

friolento

Albermarle said:

george4064 said:

These NI cuts (recently and chatter of another) does worry me, that the state pension is going to be cut.

Isn't it NI contributions that fund the state pension? I get a feeling that NI is getting cut because it might not be needed going forward, if state pension gets scrapped altogether.

NI nominally funds the state pension but the govt can shuffle funds around how it likes.
In fact normally each year the NI in is larger than the SP Out and the surplus is used to help pay other benefits.

As discussed on numerous other threads, people have been predicting the demise of the state pension for decades, whilst in fact it has been steadily going up in real terms.

It would be political suicide to reduce it/scrap it, so no Govt will do it.

Actually, whilst the 'surplus' might in the short term be used to fund other benefits, the money belongs to the NI Fund and must be returned to it on demand. In reality, the 'surplus' is transferred to the Commissioners for the Reduction of the National Debt (CRND), who pay interest to the NI Fund whilst the 'surplus' is in their custody, at the BoE base rate on a daily accrual basis. In the last financial year, the interest paid into the NI Fund was £1.2 billion. The CRND has to return the 'surplus' if required for the payments made from the NI Fund.

I put 'surplus' in quotes as it isn't actually a surplus but just a running balance.

Agree, reducing SP or scrapping it would be political suicide. But I can see a time in the next 50-60 years when it will become means tested, or perhaps get replaced by a Universal Basic Income. Unlikely I will be around to see it happen as I am getting on a bit.....

Bobblehat

friolento said:

george4064 said:

These NI cuts (recently and chatter of another) does worry me, that the state pension is going to be cut.

Isn't it NI contributions that fund the state pension? I get a feeling that NI is getting cut because it might not be needed going forward, if state pension gets scrapped altogether.

IMO, there is no near or medium term risk that state pension will be cut. The Triple Lock is already funded for the next few years because there is currently a substantial surplus in the NI Fund ( (£72.4 billion audited as of 31/03/2023, and anecdotally sitting at over £80 billion YTD), and the basic costs will be funded by ongoing NI contributions, provided the economy is ticking over on at least the mediocre basis it has been ticking over for the last few years.

The Triple Lock must be reviewed, and replaced with a more sustainable solution, in the next 5-8 years, and in the long run, the State Pension might well become means tested. All this is a long time away, and not on the current radar of any political party.

 

Please educate me ... if the NI Fund is in a substantial surplus and basic costs will be funded by ongoing NI contributions .... etc, then why would there be a need to review the Triple Lock? Isn't it working as designed?

Edit: (genuine question from me, not sarcasm!)

hallmark

Re means testing the state pension here's my prediction fwiw.  They won't do this but what they WILL do is an ever increasing raft of short-term/temporary/whatever measures designed to help the "most vulnerable" that will amount to much the same thing as they won't include people on the full state pension.  We're already seeing this kind of approach with various payouts in recent years, an example being the "council tax rebate" to counter rising fuel costs that only bands A to D were eligible for.  I suspect we'll see a lot of that type of approach, especially if Labour get in.
These kinds of targeted handouts are currently quite easy to get away with politically as one group benefits and the other group doesn't feel like they've lost anything so they don't complain too much.  Of course they HAVE lost out since the payouts come from the public purse and taxes must be raised or other services cut to fund them.  But because they don't feel it quite the same as they would a regular tax hike it passes without much comment.

Albermarle

Bobblehat said:

friolento said:

george4064 said:

These NI cuts (recently and chatter of another) does worry me, that the state pension is going to be cut.

Isn't it NI contributions that fund the state pension? I get a feeling that NI is getting cut because it might not be needed going forward, if state pension gets scrapped altogether.

IMO, there is no near or medium term risk that state pension will be cut. The Triple Lock is already funded for the next few years because there is currently a substantial surplus in the NI Fund ( (£72.4 billion audited as of 31/03/2023, and anecdotally sitting at over £80 billion YTD), and the basic costs will be funded by ongoing NI contributions, provided the economy is ticking over on at least the mediocre basis it has been ticking over for the last few years.

The Triple Lock must be reviewed, and replaced with a more sustainable solution, in the next 5-8 years, and in the long run, the State Pension might well become means tested. All this is a long time away, and not on the current radar of any political party.

 

Please educate me ... if the NI Fund is in a substantial surplus and basic costs will be funded by ongoing NI contributions .... etc, then why would there be a need to review the Triple Lock? Isn't it working as designed?

Edit: (genuine question from me, not sarcasm!)

The NI fund is more of an accounting exercise. At the end of day all NI and tax goes to the Govt., and they divi out the money to the various places. So the more pensions cost, the less there is for other items, regardless of what is or isn't in the NI fund.
Some years it is in deficit and the Govt just covers the shortfall from other sources/taxes. Here is an explanation from google.

In practice, the money from National Insurance Contributions isn’t really separate from general government funding

Even though there’s a specific pot of money for NI funds to flow into and out of, it’s not helpful—as the Institute for Fiscal Studies has argued in the past— to think of this as a ring-fenced sum that’s separate from the rest of the government’s money.

That’s because when the fund runs low (after, say, years of deficits in a row), the Treasury steps in and injects new money into the fund. And as mentioned above, the surpluses in the fund are also invested in the national debt.

That means, in practice, some money flows into the fund that doesn’t come from NI contributions, and some money flows out that doesn’t go to pensions or contributory benefits