Andrew1952;147232 wrote:Easyrider;147225 wrote:Andrew1952;147223 wrote:Vind;145565 wrote:I think there was something in the report that covered DB pensions.
On a separate but related note, there has been talk of hardening the valuation calculation for DB pensions in relation to the Lifetime Allowance. Not sure it's progressed much, but there was talk of increasing the multiple of pension upwards from 20x.
The easiest way to deal with final salary pension values (and remember the NHS superannuation scheme with 1,350,000 members is totally unfunded, joe blogs, the taxpayer pays the lot) is to SCRAP employees NI and combine it with income tax at new increased rates.
This can be done without disadvantaging most people still in work but it will claw back some of the massive payments being made to the 77,000 retired public service employees who receive pensions of *more* than average earnings.
It won't affect the tax on most savings because interest rates are zilch and there is a £1000 tax free savings allowance.
Combining income tax and NICs would increase the rate of marginal taxation for all retired people who pay tax, not just public sector employees.
I'm not advocating it, or against it. I'm simply pointing out that all retirees would have to pay more income tax irrespective of whether they worked in the private or public sector, assuming their retirement income was above the income tax threshold.
IMO the 20x multiple is ludicrous.
And why shouldn't they (pay a bit more tax) ?. The tax free allowance is £10K and they spend nothing on commuting. Why should anyone receiving the state pension and still working (which many do) also be exempt from NI ?. Not just them, I believe their employer also does not have to pay employERS NI on their pay too (need to check on this). Why should anyone carry on getting unlimited 'all you can eat for free' NHS treatment for potentially 30+ years ?. There are now 560,000 people over 85, and 15,000 over 100 and last year there was a bulge of 99-yo's (do the maths) waiting to get a card from her maj.
NI is just Tax with a cuddly name.
You raise a real issue IMO. The State Pension was introduced at a time when one retired - usually males - at 65, lived for a few years if you were lucky and then popped your clogs at about 67. It wasn't designed for people having an average life expectancy into their eighties.
About 60% of NHS expenditure goes on people aged over 60.
One strand of any "solution" could be to introduce measures to extend the working age and the pensionable age by encouraging people to have longer working lives, aided by reducing immigration and therefore labour supply, and restricting the growth of pension pots, real and hypothetical, by abolishing tax relief, reducing the pension ceiling etc.
A strategy in effect of "encouraging" people to work into old age, possibly on a P/T capacity. For example, let's say the pensionable age were increased to 70. People would be "encouraged" to work until they were 70 and pay tax and NICs until they were 70, and then and only then be eligible to draw their State and private pensions.
This would obviously reduce the number of retired people and the length of retirement.
I'm not advocating this but I wouldn't be surprised if that's the way it goes.
The days of being in F/T education until you were 22, working until you were 55 and then being retired for 30 years were an aberration and I suspect, increasing a thing of the past IMO.