State Pension and Personal allowance

xylophone

They qualified here and now live in a place far far away.


But that is immaterial. They qualified.

BikingBud

It is immaterial for some, the lucky ones, for others apparently it is very material.

Perhaps it should become the norm?

How easy is it to change the qualification rules for benefits?

squirrelpie

xylophone said:

They qualified here and now live in a place far far away.
But that is immaterial. They qualified.

I agree with the principle you're expressing, but the reality is that people who qualified here and remain here, also spend their pension here, for the most part, and thus continue to contribute to the economy as consumers and VAT payers and maybe income tax payers etc and thus reduce the cost to the government of paying their pension. People who live abroad don't. So bilateral agreements make some sense as long as the movement both ways is roughly equal. JMHO.

BrilliantButScary

xylophone said:

They qualified here and now live in a place far far away.


But that is immaterial. They qualified.

But what about those that qualified in a place far far away (paid a pittance for a UK state pension, i.e. Class 2 NI contributions) and still live in a place far far away!

xylophone

But what about those that qualified in a place far far away (paid a pittance for a UK state pension, i.e. Class 2 NI contributions) and still live in a place far far away!

Those are the rules. I didn't write them? (Happy Gilmore 1996).

Or more recently our dear leader?

Cobbler_tone

Anyone help on this basic query, more out of curiosity.

My dad gets a state pension of £252 per week. This seems more that the standard. He was born in 1937 and has a modest private pension. I also know he has a K tax code, which seems to be due to a £3k one off GMP adjustment this year. I always think it is pretty bad that an 87 year old working class elderly man pays tax on every single piece of income he receives.

Just wondering who and why someone gets £252 per week?

JoeCrystal

Cobbler_tone said:

Anyone help on this basic query, more out of curiosity.

My dad gets a state pension of £252 per week. This seems more that the standard. He was born in 1937 and has a modest private pension. I also know he has a K tax code, which seems to be due to a £3k one off GMP adjustment this year. I always think it is pretty bad that an 87 year old working class elderly man pays tax on every single piece of income he receives.

Just wondering who and why someone gets £252 per week?

Likely due to SERPs in which you can build up additional state pension. Not particularly, he will pay income taxes like everyone else in the country. Bear in mind that state pension are paid without any taxes collected so HMRC will naturally collect taxes required from his other pensions.

eskbanker

Cobbler_tone said:

I always think it is pretty bad that an 87 year old working class elderly man pays tax on every single piece of income he receives.

Like everyone else, regardless of gender, age, social status and employment, his taxable income is totalled, and anything over his personal allowance (which will accommodate the vast bulk of his state pension) is then taxed.

Cobbler_tone

eskbanker said:

Cobbler_tone said:

I always think it is pretty bad that an 87 year old working class elderly man pays tax on every single piece of income he receives.

Like everyone else, regardless of gender, age, social status and employment, his taxable income is totalled, and anything over his personal allowance (which will accommodate the vast bulk of his state pension) is then taxed.

Maybe 'ironic' rather than 'bad', appreciate that those are the rules just being applied.
We spend our whole lives paying hundreds of thousands in tax. Then once you stop earning and have a far more modest income you can end up with a negative personal tax allowance. Then you die and someone will often pay some more tax.
I'm surprised a new born baby doesn't get a tax bill. 

hugheskevi

Cobbler_tone said:

eskbanker said:

Cobbler_tone said:

I always think it is pretty bad that an 87 year old working class elderly man pays tax on every single piece of income he receives.

Like everyone else, regardless of gender, age, social status and employment, his taxable income is totalled, and anything over his personal allowance (which will accommodate the vast bulk of his state pension) is then taxed.

Maybe 'ironic' rather than 'bad', appreciate that those are the rules just being applied.
We spend our whole lives paying hundreds of thousands in tax. Then once you stop earning and have a far more modest income you can end up with a negative personal tax allowance. Then you die and someone will often pay some more tax.
I'm surprised a new born baby doesn't get a tax bill. 

I think the UK pension system is unduly generous in terms of tax avoidance.

An individual is able to draw £50,270 of taxable pension income every year between 55/57 and 66-68 without paying higher rate tax. Using UFPLS, that is up to £67,000 of income p/a without paying higher rate tax. After State Pension age that declines a bit, but there is still about £38,000 of taxable income available before higher rate tax, or about £50,000 p/a using UFPLS.

That is a huge amount of money that can be saved from higher/additional rate tax during working life to fund the post 55/57 period. The incentive is enormous, and each partner is treated separately so around £134,000 can be taken from UFPLS without paying higher rate tax for an early retired couple. I'm very much looking forward to it myself, but find it difficult to justify given that almost all of my and my wife's pension has come from income that would have been subject to higher rate tax, and now when received will be subject to something like a 15% tax rate (some will be 0%, some 15%, some 20%, some 30% and some 40% but it will probably average out at 15-20% I expect).