The inevitable pre-budget speculation on pensions

ukdw

BlackKnightMonty said:

hugheskevi said:

Grumpy_chap said:

ukdw said:

So it sounds like
20% band up to 22%.
8% NI band down to 6%.
40% tax band up to 42%,
60% tax band up to 64%, (I think)
45% tax band up to 47%.
2% NI band left as is.

I hope if that is the way the Government is thinking, they look at it set out like that and notice the absurdity of the band where the withdrawal of the PA is covered and do something to normalise that to a more progressive line.  Perhaps start the 45% (47%) band at a lower threshold, or raise the 45% (47%) rate.  Removing the impact arising from withdrawal of the PA would avoid the negative behaviours that result from the current system.

The political optics make that impossible.

There is no way a Govt could simultaneously increase tax on pensioners whilst giving a tax break to those with incomes over £100,000+. That applies no matter how absurd the system is, or how well designed the fix was, even if it was cost neutral (unless no single individual would be better off).

The vast majority of individuals have no idea how anything related to tax works, and headlines of "Tax giveaway to 6-figure earners funded by pensioners" accompanied by pictures of poor pensioners sitting next to a gas fire in winter next to city workers in suits drinking champagne would be both inevitable and politically intolerable.

The solution is simple.

Just scrap the personal allowance for everyone and it fixes the £100k trap and raises billions in tax.

Or just make it 50% starting at £100k and drop the personal allowance taper.

or even simpler - increase the rate to 42%, instead of dropping the 2% NI, increase it to 6%, and remove the personal allowance taper.  

BlackKnightMonty

ukdw said:

BlackKnightMonty said:

hugheskevi said:

Grumpy_chap said:

ukdw said:

So it sounds like
20% band up to 22%.
8% NI band down to 6%.
40% tax band up to 42%,
60% tax band up to 64%, (I think)
45% tax band up to 47%.
2% NI band left as is.

I hope if that is the way the Government is thinking, they look at it set out like that and notice the absurdity of the band where the withdrawal of the PA is covered and do something to normalise that to a more progressive line.  Perhaps start the 45% (47%) band at a lower threshold, or raise the 45% (47%) rate.  Removing the impact arising from withdrawal of the PA would avoid the negative behaviours that result from the current system.

The political optics make that impossible.

There is no way a Govt could simultaneously increase tax on pensioners whilst giving a tax break to those with incomes over £100,000+. That applies no matter how absurd the system is, or how well designed the fix was, even if it was cost neutral (unless no single individual would be better off).

The vast majority of individuals have no idea how anything related to tax works, and headlines of "Tax giveaway to 6-figure earners funded by pensioners" accompanied by pictures of poor pensioners sitting next to a gas fire in winter next to city workers in suits drinking champagne would be both inevitable and politically intolerable.

The solution is simple.

Just scrap the personal allowance for everyone and it fixes the £100k trap and raises billions in tax.

Or just make it 50% starting at £100k and drop the personal allowance taper.

That would be a ‘tax cut for the rich’.

Aylesbury_Duck

BlackKnightMonty said:

Eldi_Dos said:

BlackKnightMonty said:

RogerPensionGuy said:

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.

Shame, it’s breaking the economy, and quite frankly society.

Suppose if you repeat a mantra often enough some people will start to believe it.

Talk to anyone under 40 about what they think of the triple lock…

I suspect a good proportion of people under 40 won't have a clue what it is.  In fact, that's probably true for any age group.

Grumpy_chap

ukdw said:

Or just make it 50% starting at £100k and drop the personal allowance taper.

I think the suggested 50% rate would need to start at £75k to be the same as withdrawal of the PA.

Over the range £100k to £125,140 the income tax take is currently £15,084.
Over the range £75k to £125,140 the income tax take is currently £25,084.
If the income tax rate from £75k was 50%, then the income tax take over the range £75k to125,140 is £25,070.
This is also more difficult to avoid through pension contributions.

Eldi_Dos

BlackKnightMonty said:

Eldi_Dos said:

BlackKnightMonty said:

RogerPensionGuy said:

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.

Shame, it’s breaking the economy, and quite frankly society.

Suppose if you repeat a mantra often enough some people will start to believe it.

Talk to anyone under 40 about what they think of the triple lock…

I do talk to people under forty on a regular basis and none I have came across are particularly fixated or against the triple lock, they all seem more interested in issues that are more relevant to them, like student debt, career progression or if they are in rental accommodation securiity of tenure.

For what its worth the only thing I can see wrong with the triple lock is that a sunset clause was not included to kick in when a threshold was met, but cannot imagine that would be to difficult to change.

Silvertabby

Eldi_Dos said:

BlackKnightMonty said:

Eldi_Dos said:

BlackKnightMonty said:

RogerPensionGuy said:

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.

Shame, it’s breaking the economy, and quite frankly society.

Suppose if you repeat a mantra often enough some people will start to believe it.

Talk to anyone under 40 about what they think of the triple lock…

I do talk to people under forty on a regular basis and none I have came across are particularly fixated or against the triple lock, they all seem more interested in issues that are more relevant to them, like student debt, career progression or if they are in rental accommodation securiity of tenure.

For what its worth the only thing I can see wrong with the triple lock is that a sunset clause was not included to kick in when a threshold was met, but cannot imagine that would be to difficult to change.

A bit like the £10 Christmas bonus.  When it was introduced (1970s?) it was equivalent to a week's basic State pension.  Now it is probably worth less than the cost of the admin procedures and separate pay run needed to pay it.  But any attempt to scrap it - or even get rid of it by just adding it to the annual pension amount - wouldn't go down well.

BlackKnightMonty

Eldi_Dos said:

BlackKnightMonty said:

Eldi_Dos said:

BlackKnightMonty said:

RogerPensionGuy said:

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.

Shame, it’s breaking the economy, and quite frankly society.

Suppose if you repeat a mantra often enough some people will start to believe it.

Talk to anyone under 40 about what they think of the triple lock…

I do talk to people under forty on a regular basis and none I have came across are particularly fixated or against the triple lock, they all seem more interested in issues that are more relevant to them, like student debt, career progression or if they are in rental accommodation securiity of tenure.

For what its worth the only thing I can see wrong with the triple lock is that a sunset clause was not included to kick in when a threshold was met, but cannot imagine that would be to difficult to change.

Perhaps they are being polite?

Perhaps you should ask them direct questions about the triple lock? (Is it fair, should it be kept)

Albermarle

BlackKnightMonty said:

Eldi_Dos said:

BlackKnightMonty said:

Eldi_Dos said:

BlackKnightMonty said:

RogerPensionGuy said:

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.

Shame, it’s breaking the economy, and quite frankly society.

Suppose if you repeat a mantra often enough some people will start to believe it.

Talk to anyone under 40 about what they think of the triple lock…

I do talk to people under forty on a regular basis and none I have came across are particularly fixated or against the triple lock, they all seem more interested in issues that are more relevant to them, like student debt, career progression or if they are in rental accommodation securiity of tenure.

For what its worth the only thing I can see wrong with the triple lock is that a sunset clause was not included to kick in when a threshold was met, but cannot imagine that would be to difficult to change.

Perhaps they are being polite?

Perhaps you should ask them direct questions about the triple lock? (Is it fair, should it be kept)

I suspect if you did that, then the most common reaction would be a blank look.

ukdw

Eldi_Dos said:

BlackKnightMonty said:

Eldi_Dos said:

BlackKnightMonty said:

RogerPensionGuy said:

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.

Shame, it’s breaking the economy, and quite frankly society.

Suppose if you repeat a mantra often enough some people will start to believe it.

Talk to anyone under 40 about what they think of the triple lock…

I do talk to people under forty on a regular basis and none I have came across are particularly fixated or against the triple lock, they all seem more interested in issues that are more relevant to them, like student debt, career progression or if they are in rental accommodation securiity of tenure.

For what its worth the only thing I can see wrong with the triple lock is that a sunset clause was not included to kick in when a threshold was met, but cannot imagine that would be to difficult to change.

And when that threshold is met what would you go to? 

I think just an inflation link would be sufficient - but not going down if CPI is negative - just holding position until CPI catches up again.

I guess you could also have a minimum 2.5% rise on the same basis - i.e. Only over 2.5% if cumulative inflation is above that.

To me the biggest issue with the triple lock is only assessing each factor over a single year.

BlackKnightMonty

Albermarle said:

BlackKnightMonty said:

Eldi_Dos said:

BlackKnightMonty said:

Eldi_Dos said:

BlackKnightMonty said:

RogerPensionGuy said:

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.

Shame, it’s breaking the economy, and quite frankly society.

Suppose if you repeat a mantra often enough some people will start to believe it.

Talk to anyone under 40 about what they think of the triple lock…

I do talk to people under forty on a regular basis and none I have came across are particularly fixated or against the triple lock, they all seem more interested in issues that are more relevant to them, like student debt, career progression or if they are in rental accommodation securiity of tenure.

For what its worth the only thing I can see wrong with the triple lock is that a sunset clause was not included to kick in when a threshold was met, but cannot imagine that would be to difficult to change.

Perhaps they are being polite?

Perhaps you should ask them direct questions about the triple lock? (Is it fair, should it be kept)

I suspect if you did that, then the most common reaction would be a blank look.

I think you will find their awareness of the intergenerational injustice is wider than you give credit.