"Average Earnings Growth" and triple lock

artyboy

Dazed_and_C0nfused said:

MK62 said:

Slapping NI on pension payments is very unlikely in my view, at least full rate NI. You can't simply whack existing pensioners with a new 8% tax and not expect serious pushback....... 

And that's before thinking about the anomalies using the existing NI system would bring.

Pensioner has worked all their life as a Teacher and gets say £25k Teachers Pension.  Will pay NI on anything above ~£1,048/month

Next door neighbour also has £25k (non State) pension income but spread across 3 individual pensions, each paying less than £1,048/month. So no NI to pay.

Hang on, does it really work like that? So a person in our wonderful Gig economy could be working 5 low paid jobs that might add up to £25k, but because none of them exceed the lower earnings limit, they never pay NI?

If that's the case, anyone with a big DC pot would be advised to split it across several providers before starting drawdown...

Silvertabby

michaels said:

SnowMan said:

michaels said:

Of course from April 27 we will be in the situation that those on pension credit will get the full amount whereas those on the state pension will get less as they will lose some of their income to tax. I can not see any logical way of justifying that those who have not contributed should get more than those who did but what do I know?

Worth remembering that the guaranteed pension credit top up (for a single person) is to £227.10pw for 2025/2026 which is less than the new state pension of £230.25pw (so £3.15pw difference). 

And the guaranteed pension credit rate top up amount will probably go up with prices into 2026 whereas the new state pension increase will be the higher earnings increase. Over time the difference should widen. 

Also it is income net of tax that is taken into account for pension credit purposes. So perhaps that would mean that when the new state pension becomes greater than the personal allowance that a net state pension figure would be used as income albeit the state pension is taxable but paid gross. 

So I wouldn't accept that the normal scenario (or even a common scenario) will be someone who 'has contributed' getting less.

That said it may be possible to construct an example where someone is better off (even now) through not having a full new state pension than having a full state pension. Perhaps a couple where one partner gets the full new state pension and one gets very little state pension and where there are disability or carer elements of pension credit in play and where there are passported benefits such as council tax benefit involved.       

Thanks, didn't realise it was based on net income - so we still may well see people who only get the state pension having some taken away in tax and then being paid a top up of pension credit....

...and all the other means tested benefits being in receipt of PC opens the door to.  What an absolute FUBAR ! 

Stubod

I also think that the triple lock has outstayed it's welcome and should be changed to just reflect either earnings or RPI. (Better that than applying NI!).   

Mick70

triple lock will go within the next couple of years IMO and simply rise with CPI or RPI at most , it is unsustainable in current form .  SP age will rise to 70 over the next 20-25 years.  

michaels

If pensions only go up by inflation rather than earnings then pensioners will be pushed back into relative poverty which is exactly the sort of poverty that 'progressive' campaigners object to.

ClashCityRocker1

Obvious answer is a cut in NI accompanied by increase in Income tax alongside a threshold hike to match state pension. But that would compromise the snow white, virgin truth manifesto commitment that no Government has ever before abandoned.

michaels

ClashCityRocker1 said:

Obvious answer is a cut in NI accompanied by increase in Income tax alongside a threshold hike to match state pension. But that would compromise the snow white, virgin truth manifesto commitment that no Government has ever before abandoned.

A shift from NI to IT will not hit 'working people' (except for pensioners post state pension age)!

HedgehogRulez

Just bite the bullet and put 1% on basic rate and 2% on higher rate tax

Silvertabby

HedgehogRulez said:

Just bite the bullet and put 1% on basic rate and 2% on higher rate tax

But they promised not to increase taxes for 'working people'  ......

westv

Silvertabby said:

HedgehogRulez said:

Just bite the bullet and put 1% on basic rate and 2% on higher rate tax

But they promised not to increase taxes for 'working people'  ......

They did in a round about way in the last budget. By increasing employer NI they effectively passed on the tax increase to consumers via price increases.