Sticky fingered government at it again?

mechy

:mad: Would someone put me right on an issue, told to me by a friend. We were just having a general chat about pensions etc, he asked if my parents were still alive, which I answered yes. He told me that the government had a plan, whereby if I was left a house or money in a will, they where planning to subtract it out of your pension pot??
Has my friend got his lines crossed, or have our "New Labour" friends really come up with a gem this time.

sneekymum

Yes I heard that one too - it was a BBC news item last week - its only an idea so far - but they're planning to means-tast the state pension extra top-up bit (which most of the people who qualify for it don't know it exists anyway~) against assets as well as income..

I'll look for this news item & get a link if I can.

deemy2004

I don't see whats wrong with the plan ?

Since the means tested top up is for poor pensioners who don't have assets other than the home they live in.

Remember its tax payers who are paying and its not right that the tax payer pays for someone who say recieves an heritance worth maybe several hundred thousand pounds, when it was meant for poor pensioners, perhaps if it is better targetted more money could be allocated to poor pensioners.

Many changes are going to have to be made, because there just won't be enough money in the coffers to sustain state and public sector pensions at the current levels unless obviously more money is brought in to public pensions or more people recieved a smaller share....

sneekymum

It was in Mr Blunkett's speech - HERE

and is not one of the ideas currently being discussed by the Pensions Commission.

mechy

Thanks all. I'm probably thinking the same as everyone else that, when parents try to pass a "small" inheritance onto their offspring, our lords and masters will eventually find a way of getting their mitts on ir somehow. Keep your thoughts comming please.

sneekymum

While I neither agreed nor disagree with this idea (it doesn't affect me - I'm fabulously rich already) I do think it's clever as I haven't been able to think of any ways round it - yet...

The current IHT laws are easy to bypass. Being asset rich and income poor is easy (do it all the time) but how to avoid being asset rich while having assets

Ah - I've thought of one - who's to know if mum leaves you her 10carat engagement ring? How about dad's chunky platinum chain? I can see a boom in jewellery coming - yes I know these should be declared - but how many people leave the jewellery box to be taken into account for IHT purposes? Cash left to you or property has paperwork with it...

DavidLaGuardia

sneekymum wrote:

Ah - I've thought of one - who's to know if mum leaves you her 10carat engagement ring? How about dad's chunky platinum chain? I can see a boom in jewellery coming - yes I know these should be declared - but how many people leave the jewellery box to be taken into account for IHT purposes? Cash left to you or property has paperwork with it...

Excellent, Get your parents to become chavs!

But seriously (and not withstanding that the resale value of secondhad jewelry normally guarantees a loss) the Min imcome guarantee is means tested to capital now so this stoy is no great revelation.
A set state pension should not be means tested as this discourages people from saving for retirements. Yes there are credits now awarded, but they are CRAP, and mean the marginal rate of tax on a future pension is high.
I would rather we bit the bullet of pensions today and for the future, target the minimum wage and incoporate a compulsory pension contribution on this. To kick start it less panilessly double relief on the contributions could be permitted to a business for doing this over the first three years to give more planning time.

Hey sneeky, for the recored are you rich through making it, inheritance or marriage?

sneekymum

The first two but I married a good man.

The problem with the pension system is that it was started with the idea that we were contributing to it. This was a noble idea to get poor folk to accept that it was their right and not charity. The first pensioners got it without contributing and eventually there will be the last who contribute lots and receive nothing. The reality is that many people cannot afford to pay into a pension for themselves yet have to pay National Insurance which pays for the pension of others currently receiving them. Pensioners like my mother - who's a higher rate tax payer already (yes - she gets the winter fuel allowance too!) ...And now the ethos is changing and we're told we have no right to expect that the country will pay for our old age.

Of course, Mother would say "I've paid my stamp all my working life" - not that she did much work, as a director's wife she had a nominal job and turned up when she was passing. What little she "contributed" over the years surely cannot have paid for what she receives now - can it? Since the're not kidding anyone I think its time they stopped pretending.

I like the Liberal policy (as a Liberal) that proposed raising the pension age to 75, making it much more generous (best in Europe) and not means-tested but dependant on years of residency in this country. That way those who missed contributions through illness, misfortune or family commitment will not be penalised. And no one can just turn up here and expect a hand out...

Pal

I disagree. Simply scrap state pensions and replace them with means-tested income support. After all, pensioners are just older unemployed people aren't they? You can then set the income support level at a reasonable level for the current pensioners, but at the normal level for those who have yet to retire.

You can increase the state "retirement" age to 70 while you are at it.

Nothing like the idea of being "unemployed", "on benefits" and having to work to age 70 to galvanise those middle class earners who claim they have no money to save for their retirement while still buying new cars and going on two holidays a year.
In practice you could set the benefit levels to the same as they are now. It is just the thought of being on the dole that will make people think again about their finances.

sneekymum

What about those who were told that the NI payment that they were paying all those years was for their pensions? I don't think rich people should be receiving state benefits either - but the system was not set up as a benefit. When did this change? Perhaps they should scrap the NI contribution, increase tax instead.

Putting everyone on means-tested income support would certainly cut a lot of red tape.

Pal

sneekymum wrote:

What about those who were told that the NI payment that they were paying all those years was for their pensions? I don't think rich people should be receiving state benefits either - but the system was not set up as a benefit. When did this change? Perhaps they should scrap the NI contribution, increase tax instead.

What is a "benefit"? The state pension was set up as a benefit in order that older people did not have to work until they dropped. The problem is that the word "benefit" has come to signify payments to those who are unable to work or fall on hard times. In the end it is all just money paid out of taxation by the Government. What you call it is irrelevant.

Scrapping NI and folding it into income tax?! But that would make us a high tax economy!! <shocked, slightly sarcastic, agreeing with you smiley>

The whole NIC system is completely bloody daft in my opinion - just a waste of resources designed to keep half of Newcastle employed. (nothing against newcastle but you get my point).

I am not advocating cutting the amount of money being paid to people (except, perhaps, through means testing). I am advocating paying the same amount of money to people without pension saving, but calling it what it is: unemployment benefit.

You could make a call on means testing it either way. I was being deliberately harsh before, and actually advocate no means testing above a certain age (say 70).

But the main problem now is people who believe they are entitled to something even though they paid very little for it. (this is not their fault - they have been led to believe that this is the case by successive governments). I do not wish to penalise the "I paid my stamp" brigade who have already retired. It is the "I am PAYING my stamp" brigade that are the problem. Call the state pensions "income support" or "old persons unemployment benefit" and suddenly people will start saving for their retirement, irrespective of whether the amount of money has changed or not.