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wish I could afford one

Paying Down The Deficit - Basic State Pension Biggest Rise Since 2001

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I'm currently 43 years of age. When I'm planning for my financial independence I assume that the State Pension I receive will be precisely £0 per annum. This is because I believe it is likely it will either be means tested or set to an age where it will be useless (ie I'll be probably dead). This is based on the assumption the country won't be able to afford it.

No such problems today. Basic State Pension to rise 2.9% because of the triple lock. Hooray, looking forward to the extra debt for the future generations or increase on my taxes today!

http://www.bbc.co.uk/news/uk-politics-34886571

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£119 basic pension a week is not that much to live on....not forgetting savings saved over a lifetime of working are not worth what were worth when put away for a rainy day...being slowly washed away.....

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On the brightside i ordered an NI statement from HMRC which turned up yesterday.

You now only need 10yrs NI contributions to qualify for a state pension.

Everyone born before April 1953 needs 30yrs contributions.

I don't know why this was changed?

(i'm comfortably in with 23 qualifying years paid circa £50k)

If it's as said 10yrs NI to qualify, someone could move to the UK aged 58 and put in 10yrs and collect a full pension?

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Well, it's far more likely housing benefit paid to pensioners will be cut before the actual pension itself is.

How long before pensioners who, for whatever reason, find themselves renting in retirement have to work to pay their rent?

As for people working for their pension, the idea has been mooted before.

It's just unfortunate that most pensioners can't just turn up to a private members club, drink free vintage champagne then sign a form and be paid 300 pound a day.

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20 years is a long time. In that time voter demographics will of changed and no longer overly favour boomer voters.

plus the government stated rate of inflation is usually well below the real level of inflation to erode the value of unpayable promises.

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or set to an age where it will be useless (ie I'll be probably dead).

http://www.bbc.co.uk/news/uk-politics-34886571

I've read your blog. But on this point isn't the private pension going to be pegged 10 years below the state pension before you retire giving you only 10 years (based on your life expectancy assumption) to drawdown from what I've read to be a considerable amount..?

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On the brightside i ordered an NI statement from HMRC which turned up yesterday.

You now only need 10yrs NI contributions to qualify for a state pension.

Everyone born before April 1953 needs 30yrs contributions.

I don't know why this was changed?

(i'm comfortably in with 23 qualifying years paid circa £50k)

If it's as said 10yrs NI to qualify, someone could move to the UK aged 58 and put in 10yrs and collect a full pension?

At least 10 years. 35 years for full new state pension from April (estimated at ~£155).

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On the brightside i ordered an NI statement from HMRC which turned up yesterday.

You now only need 10yrs NI contributions to qualify for a state pension.

Everyone born before April 1953 needs 30yrs contributions.

I don't know why this was changed?

(i'm comfortably in with 23 qualifying years paid circa £50k)

If it's as said 10yrs NI to qualify, someone could move to the UK aged 58 and put in 10yrs and collect a full pension?

But that's not a full state pension, with 10 qualifying years you'd get about 43 quid a week. The change from 30 to 35 qualifying years is pretty big and the rates have gone up in part to compensate I think, but then the government also want to get rid of pension credit so that may help explain it too.

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I've read your blog. But on this point isn't the private pension going to be pegged 10 years below the state pension before you retire giving you only 10 years (based on your life expectancy assumption) to drawdown from what I've read to be a considerable amount..?

At this point (of course subject to change as well as the 10 year peg is subject to change) I'm one of the last to be able to access the State Pension at 55. I'm hoping to be done around 44/45 so the plan is to live off non-pension funds for those 10/11 years (+ some contingency). Then when I can access my Private Pension it will become my primary 'income' (and as I said above I plan on £0 State Pension) until I fall off my perch. At this moment in time I have £460k outside the pension and £377k within pension wrappers (all Defined Contribution).

Right now I'm hitting the pension hard and should come close to £40k contributed this year. As soon as Osborne changes the tax relief/deferral rules I'll back off the pension and hit the non-pension hard. The non-pension portion has to not only give me/my family enough to live off but it also has to buy us a home.

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£119 basic pension a week is not that much to live on....not forgetting savings saved over a lifetime of working are not worth what were worth when put away for a rainy day...being slowly washed away.....

There are poor pensioners, but there are also a large number of extremely comfortable pensioners. The obvious solution is to collect more tax from the well-off pensioners and then use it to increase the basic state pension, e.g. by unifying income tax and national insurance and collecting it across all age groups.

Given how well pensioners as an age group have done relative to all other age groups over the last 8 years, the idea of transferring even more from younger age groups to pensioners would be, in my opinion, fairly objectionable.

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There are poor pensioners, but there are also a large number of extremely comfortable pensioners. The obvious solution is to collect more tax from the well-off pensioners and then use it to increase the basic state pension, e.g. by unifying income tax and national insurance and collecting it across all age groups.

Given how well pensioners as an age group have done relative to all other age groups over the last 8 years, the idea of transferring even more from younger age groups to pensioners would be, in my opinion, fairly objectionable.

I think the state pension could be means tested away above say, £20k per annum in private pensions.

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I think the state pension could be means tested away above say, £20k per annum in private pensions.

That's what I'm planning for. Pay in plenty, which of course just funds part of today's liabilities, then get nothing in return. I am yet to receive a single benefit in my life. I can't see it happening in the future either as I've taken responsibility.

Edited by wish I could afford one

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It's just plain immoral that kids from poor backgrounds are having their education options cut off whilst rich pensioners are seeing yoy state benefit increases.

The necessary cuts to government spending should be spread equally around society.

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Why don't pensioners pay NI? It would avoid means testing if it was charged on pension income. Don't really understand why they are exempt.

Especially since NI supposedly provides health insurance, and pensioners are the biggest consumers of healthcare.

Unfortunately the Conservatives, Labour and Lib Dems have all arms raced themselves to this point where they are all terrified of touching pensioner tax/benefits (unless it's to further increase intergenerational inequality).

Meanwhile a pensioner with a paid off house and a £25k pension is paying a 20% marginal tax rate while a 28 year old on £25k is paying 20% income tax + 12% NI + 9% student loan = 41% marginal tax rate and is renting a room or a flat for 30-50% of their take-home.

Edited by Dorkins

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Meanwhile a pensioner with a paid off house and a £25k pension is paying a 20% marginal tax rate while a 28 year old on £25k is paying 20% income tax + 12% NI + 9% student loan = 41% marginal tax rate and is renting a room or a flat for 30-50% of their take-home.

I only realised this a few years ago. Since then, I have been dumping everything I can into pension via salary sacrifice.

The lump-sum clears the mortgage at age 55, the pension is NI-free. So my effective marginal tax rate drops from 65% to 15%.

The marginal tax / NI rules create a massive distortion in incentives. My incentives have become "spend as little as possible" and become that "pensioner with a paid off house" as soon as possible. (currently in my 40's). It seems to be the only way to keep most of what I've earned.

My boss has just announced he his retiring early after dumping the maximum into pension for several years. I have to now consider going for that job. More hours, more stress, more travel (hassle) but I can't/won't take any of the extra £ in practice due to the extreme marginal rate. The only way I get to see a benefit would be a bigger pension later on (and the risks that involves with rule changes - imminent or otherwise).

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That seems to be the official line from both the blue and red parties these days. Of course it's not possible to pay down a deficit only a debt which we know is never going to happen no matter what Ossie says. It was just me being cynical.

I was just wondering why it was in the thread title as the concept is clearly nonsensical. Thanks for clarifying.

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Richard Murphy in the Graun today arguing that the UK deficit will be at least £40bn in 2020.

George Osborne could be forced to borrow billions of pounds more than forecast by 2020 if he sticks with spending cuts that will damage hit economic growth, according to a report by City University.

With only days to go before the chancellor’s autumn statement, the report said the Treasury has underestimated the impact of welfare and departmental spending cuts on the broader economy and especially cuts to public sector investment.

Without a boost to public infrastructure, private sector businesses will limit their own investment plans, leading to lower productivity and depressed GDP growth over the next four years.

By 2020 the government will be forced to report a £40bn deficit instead of the planned £10bn surplus, the report concludes, undermining Osborne’s fiscal charter, which dictates that governments borrow only in times of distress.

The study by two academics from City University comes only days before the chancellor is expected to tell parliament that he plans to achieve a budget surplus by 2020 from a mixture cuts to departmental spending, welfare and from higher tax receipts, especially income tax and national insurance.

But he is already off track in the current 2015/16 year after a run of poor figures for the public finances. Last week the Office for National Statistics reported that higher government spending and lower corporation tax receipts than expected in October had sent borrowing to highest for that month since 2009.

Richard Murphy, an academic at City University who has advised the Labour leader Jeremy Corbyn, said the £50bn gap in borrowing is likely because the Treasury will repeat the same mistakes it made between 2010 and 2015, when the coalition government borrowed £160bn more than predicted.

http://www.theguardian.com/business/2015/nov/23/budget-deficit-could-hit-40bn-pounds-autumn-statement-george-osborne

Edited by zugzwang

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...while a 28 year old on £25k is paying 20% income tax + 12% NI + 9% student loan = 41% marginal tax rate and is renting a room or a flat for 30-50% of their take-home.

And their employer is paying 13.8% NI on their behalf.

The reality is a 28 yr old basic rate taxpayer with student loan has a marginal rate of tax of 48%*.

A higher rate 28 yr old with student loan has a marginal tax rate of 57%**

*funny calculation, but remember the employer is paying 13.8% without you noticing - so really everyone's salary should be noted as being about 12% higher.

**remember, higher rate taxpayers pay additional NI at 2%.

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A higher rate 28 yr old with student loan has a marginal tax rate of 57%**

Add another 17% if they have two kids and are losing child benefit in the £50-60K band.

In that case, after commute costs, they would be lucky to be keeping 20% of their marginal earnings in that band.

Incentive to work extra => Err, not a lot.

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Boomer baiting gone mad.

With the states money.

An effing disgrace.

Walk around any Waitrose at any time, its like a feckin zombie movie.

They literally dont know how to get through the cash.

Edited by shindigger

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Boomer baiting gone mad.

With the states money.

An effing disgrace.

Walk around any Waitrose at any time, its like a feckin zombie movie.

They literally dont know how to get through the cash.

Its crazy isnt it.My estate is full of them.Mostly ex government workers/council/police.None seemed to work past 55.They seem to replace everything all the time,patios,fences,cars.A good few seem to give their kids the cars once three years old and buy another.The younger workers scratching a living while being taxed to death to pay for the scroungers at both ends.Rather than deal with it though government will simply keep pushing back retirement age for everyone else.

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After tax my parents bring in more in retirement than my wife and I do in work*

*admittedly if we were both working full time we'd earn more but we'd still be worse off after childcare costs.

My dad's state+final salary pension come to about £30k a year and my mum's to about £22k. And they get a winter fuel allowance and free bus pass.

My aunt and uncle take in £35k each in final salary+state pensions. The uncle worked in insurance and gets 2/3rd of final salary plus share payouts.

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