The inevitable pre-budget speculation on pensions

aroominyork

ClashCityRocker1 said:

But abolishing NI and increasing Income Tax would be a a sudden and big leap in tax for those over retirement age. I think you'd have to hike the personal allowance a bit to compensate.

Hiking the personal allowance would be consistent with shifting things around a bit. But there could instead be a total restructuring by making the state pension a means tested safety net -  the Australian model is increasingly mentioned. That way, NI can be abolished and the triple lock can tootle off into the distance. It would of course need to be phased in over a long period of time, but my guess is we'll move there eventually so the sooner the process begins, the better. 

Silvertabby

aroominyork said:

ClashCityRocker1 said:

But abolishing NI and increasing Income Tax would be a a sudden and big leap in tax for those over retirement age. I think you'd have to hike the personal allowance a bit to compensate.

Hiking the personal allowance would be consistent with shifting things around a bit. But there could instead be a total restructuring by making the state pension a means tested safety net -  the Australian model is increasingly mentioned. That way, NI can be abolished and the triple lock can tootle off into the distance. It would of course need to be phased in over a long period of time, but my guess is we'll move there eventually so the sooner the process begins, the better. 

The original UK State pension was not only means tested, but it was only payable to those who were  over 70 (both men and women) and of 'good character'.

The means and good character tests were dropped in the 1920s, along with the age (to 65, again for both men and women).

Re-applying the means test after so many years wouldn't be legally impossible, but I really can't see it happening.

If it is, then the notice period would have to be at least 40 years - with all those affected personally interviewed, and required to sign an official statement confirming that they were fully aware of the future changes. 

aroominyork

Silvertabby said:

aroominyork said:

ClashCityRocker1 said:

But abolishing NI and increasing Income Tax would be a a sudden and big leap in tax for those over retirement age. I think you'd have to hike the personal allowance a bit to compensate.

Hiking the personal allowance would be consistent with shifting things around a bit. But there could instead be a total restructuring by making the state pension a means tested safety net -  the Australian model is increasingly mentioned. That way, NI can be abolished and the triple lock can tootle off into the distance. It would of course need to be phased in over a long period of time, but my guess is we'll move there eventually so the sooner the process begins, the better. 

If it is, then the notice period would have to be at least 40 years - with all those affected personally interviewed, and required to sign an official statement confirming that they were fully aware of the future changes. 

Why, to 40 years and to interviews?

Silvertabby

aroominyork said:

Silvertabby said:

aroominyork said:

ClashCityRocker1 said:

But abolishing NI and increasing Income Tax would be a a sudden and big leap in tax for those over retirement age. I think you'd have to hike the personal allowance a bit to compensate.

Hiking the personal allowance would be consistent with shifting things around a bit. But there could instead be a total restructuring by making the state pension a means tested safety net -  the Australian model is increasingly mentioned. That way, NI can be abolished and the triple lock can tootle off into the distance. It would of course need to be phased in over a long period of time, but my guess is we'll move there eventually so the sooner the process begins, the better. 

If it is, then the notice period would have to be at least 40 years - with all those affected personally interviewed, and required to sign an official statement confirming that they were fully aware of the future changes. 

Why, to 40 years and to interviews?

40 years so those just starting out will know that they will have to save for retirement from day 1 of their working lives. 

Personal interviews (and signed statements) rather than flooding the media etc with the details.  That way, those who reach what would have been their SPA won't be able to try to claim that the new rules shouldn't apply to them, because they were too busy to watch the news/didn't read newspapers/didn't talk about pensions with their friends and work colleagues/had no interest in pensions full stop.  (Oops - now I've done it!)

aroominyork

You don't need to give a lifetime's notice to change a system, but an overnight change would face some kind of challenge in law. The WISPI women opened the question about the type and gone of notice that might be needed. This, of course, would be of a completely different magnitude.

Cobbler_tone

Today I have read about a 2p increase on IC and 2p reduction on NI. Reducing or scrapping NI relief on salary sacrifice. Reducing the TFLS to £100k. Extending the freeze on tax bands.
They may not do any of them but at the same time could do all of them. If they did I think some posters on here would go into meltdown. Being close to retirement could mean a case of damage limitation but I’m sure they’ll be an impact somewhere but hopefully not enough to change my plans.

Silvertabby

aroominyork said:

You don't need to give a lifetime's notice to change a system, but an overnight change would face some kind of challenge in law. The WISPI women opened the question about the type and gone of notice that might be needed. This, of course, would be of a completely different magnitude.

That's what I meant.  The re-equalisation of State pension ages was announced in the 1993 budget, then very widely advertised in the mid 1990s as the 1995 Pensions Act.

The gradual (over 8 years)  re-equalisation started in 2010, thus giving 17 years notice to those first affected (ie, SPA 60 years and 3 months), with the average notice for those of us born in the mid 1950s being 25 years.

Yet the WASPI campaign is based on this not being enough notice/everyone didn't get a personal letter  explaining the changes.

BlackKnightMonty

Cobbler_tone said:

Today I have read about a 2p increase on IC and 2p reduction on NI. Reducing or scrapping NI relief on salary sacrifice. Reducing the TFLS to £100k. Extending the freeze on tax bands.
They may not do any of them but at the same time could do all of them. If they did I think some posters on here would go into meltdown. Being close to retirement could mean a case of damage limitation but I’m sure they’ll be an impact somewhere but hopefully not enough to change my plans.

And the 2026 budget will do more again.

Spending is out of control. 

RogerPensionGuy

Cobbler_tone said:

Today I have read about a 2p increase on IC and 2p reduction on NI. Reducing or scrapping NI relief on salary sacrifice. Reducing the TFLS to £100k. Extending the freeze on tax bands.
They may not do any of them but at the same time could do all of them. If they did I think some posters on here would go into meltdown. Being close to retirement could mean a case of damage limitation but I’m sure they’ll be an impact somewhere but hopefully not enough to change my plans.

With the current blackhole, economic outlook/GDP/age demographics etc and having in place a sensible headroom for the following few budgets, pulling a fair few levers looks very likely to me.

Only one item comes to mind that they won't pull on, state pension tripple lock. 

We will see on the 26th.

DRS1

RogerPensionGuy said:

One article I read said for every 1% extra applied to the 20% income tax produces 8 billion pounds and every 1% extra applied to 40% produces just 2 billion pounds.

If the black hole needs filling and a sensible fiscal headroom is to be achieved, it will need realistically an income tax rise and many smaller levers to be pulled. 

If unpopular choices are not made and inacted now, the next few budgets will become even more problematic for any government. 

My spare room is now fully stocked up with coke and popcorn for the event. 

I remember the days when people used to stock up on alcohol and cigarettes before a Budget in case the excise duty went up.

But now you come to mention it taxing cocaine and other drugs could be a money spinner (not sure about popcorn though).

For those who can't see the idiotic grin on my face that was a JOKE.