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Why Don't Pensioners Pay National Insurance?


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The lib dims want to up tax to pay for the nhs. I would suggest a deal where pensioner benefits remain but they pay NI. For a start, employing a pensioner is 11% cheaper which explains B&Q's policy.

I could accept giving them a higher starting threshold (say the standard state pension) but after that they should pay NI like the rest of us. I would guess this in itself could resolve the NHS funding issue.

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I don't agree on charging them National Insurance because NI is supposedly to pay for your unemployment benefit should you become unemployed. Pensioners wouldn't be able to claim that though because they get their pension.

Why don't we just hit them with an additional old age tax? ie an extra tax for being over 65?

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Every government would love to do it,though i doubt any would be elected with that in their manifesto.Much more likely they will simply keep pushing back the pension age (and the age you can access private/work pensions).

There are so many reliefs now (tax allowance,dividend tax allowance,capital gains tax allowance,ISAs) that there is no need for most ordinary pensioners (or anyone retired) to pay any tax anyway,so NI wouldnt make any difference as hardly anyone retired would pay it.

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Do you get more unemployment benefit if you have paid more national insurance then?

No,but you do get it for 6 months without it being means tested if you have paid class 1 NI stamp for the two years before claiming.Its the only none means tested benefit for people with savings or a working partner.

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I don't agree on charging them National Insurance because NI is supposedly to pay for your unemployment benefit should you become unemployed. Pensioners wouldn't be able to claim that though because they get their pension.

Why don't we just hit them with an additional old age tax? ie an extra tax for being over 65?

...and NI pays for your pension. People's NI contributions who are under 65 also go towards current pensions.

There is more to it than that though, 11% is a huge difference on what is typically the highest expense for business (staff), therefore you have uneven competition for employment whether young, old, black, pink, disabled, short, tall, female or male.

One thing I don't expect many over 65 to understand however is that it may cause people under 65 to be displaced from the opportunity to contribute towards their own pensions later on. Perhaps the government being deprived of revenue it would otherwise have got in order to provide public services you might, such as dealing with the swaithe of dementia the media reminds us about.

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Roll NI into income tax. It's a grand lie that there is a separate pot for state insurance.

Absolutely 100% certain this will happen in the next 10 years. It will apply to all income and gains. It will be about 7%.

It doesn't hit pensioners it hits income. Indiscrimately.

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most pensioners (excluding the well-heeled final-salary pensioners) pay very little tax anyway given that the tax free allowance is going up to £11k (believe it or not many of us are only just above this level) so I do not belieive charging pensioners NI would raise very much additional money for the NHS or anything else. It would also be politically damaging as there could be no justification in applying a 'working' earned income tax to those who do not/are unable to work. If it was to be applied it should also be applied to those in receipt of 30K a year in other benefits which is neither NI'd or taxed.

The simplist solution would be to increase the rate of income tax by one or 2 percent and make all benefits taxable (as the state pension is) and get rid of tax credits!

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Do you get more unemployment benefit if you have paid more national insurance then?

Indeed. I hate all these flat benefits if someone has paid in either very little or lots. There should be tiering or something.

I also don't think people over say 21 should get free health care for all but the very worst conditions until they have paid say 50k in aggregate tax.

Edited by Mikhail Liebenstein
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Just a reminder for you PAYE'rs that using salary sacrifice, you avoid employee (and employer in my case) NI contributions so this can be added to your fund. When you pull the money out, no NI to pay.

It finally realised that 10 years ago and it changed my whole financial plan. I'm basically trying and turn into a pensioner asap. (Late 40's now). The current Tax/NI system simply encourages me to excessively save now then stop work or go part-time asap and take it easy.

If pensioners also paid NI, I don't think it would change my plan much. I'm aiming for low income early to get out of the system rather than a high income at 67.

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Roll NI into income tax. It's a grand lie that there is a separate pot for state insurance.

Had that been the case in 1997, NuLabour would not have swept to power on a wave of euphoria at Blair's promise of "No tax increases". Predictably, (was I the only one who saw that coming?) within weeks of gaining power he raised NI contributions.

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Every government would love to do it,though i doubt any would be elected with that in their manifesto.Much more likely they will simply keep pushing back the pension age (and the age you can access private/work pensions).

There are so many reliefs now (tax allowance,dividend tax allowance,capital gains tax allowance,ISAs) that there is no need for most ordinary pensioners (or anyone retired) to pay any tax anyway,so NI wouldnt make any difference as hardly anyone retired would pay it.

didn't Osborne get rid of the dividend allowance this year?

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didn't Osborne get rid of the dividend allowance this year?

No he set it at £5k outside of an ISA.So its a case of keeping your divis outside an ISA below that.Inside an ISA is not affected.It makes moving any capital you can into the ISA each year crucial now though where before.He did it more for limited companies,but it dragged in ordinary shares outside of ISA/Pension wrappers.

It does leave open the problem they might put a limit on ISAs at some point,though it will likely be much higher than frugal HPCs need to worry about.

It would create problems for anyone coming into a lot of money though who wanted to invest in blue chip shares all at once.The new ISA £20k allowance next year means capital can be moved pretty quickly,even more so for couples.

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Apparently Osborne came within a whisker of folding NI into income tax, and it's come close several times before.

I guess it'll happen before too long, you just need a government confident of re-election and that'll be one of a slew of tax clean ups. A strong Corbyn win over Smith probably brings the end of NI that bit closer.

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No. I am talking about employed pensioners (of which there are many and set to be many more)

If I employed my 16 year old and my father-in-Law, it would cost me 10% more to employ my son and he would get 10% less in his pay packet. And he would have to pay for the bus to work. Doesn't seem entirely right to me.

Personally I would like to see tax and Ni combined if only so people could actually see how much is robbed off them every month. It would also remove a lot of avoidance schemes and a hell of a lot of tax code.

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No. I am talking about employed pensioners (of which there are many and set to be many more)

If I employed my 16 year old and my father-in-Law, it would cost me 10% more to employ my son and he would get 10% less in his pay packet. And he would have to pay for the bus to work. Doesn't seem entirely right to me.

Personally I would like to see tax and Ni combined if only so people could actually see how much is robbed off them every month. It would also remove a lot of avoidance schemes and a hell of a lot of tax code.

Yes, it's amazing how people think that employers don't calculate their employees' remuneration based on total cost to the company.

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No NI should not be rolled into tax.

People who pay in (NICs) should have better benefits than those who don't.

You have to be credited with 35 years of NICs for the state pension. Pension is reduced pro-rata for years less than this.

There seems to be real jealousy and spite directed towards pensioners by some people on this forum. For heavens sake, it's the last few years of your life. You are likely to be sick and frail. If you've worked all your life you deserve some reward.

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No NI should not be rolled into tax.

People who pay in (NICs) should have better benefits than those who don't.

You have to be credited with 35 years of NICs for the state pension. Pension is reduced pro-rata for years less than this.

There seems to be real jealousy and spite directed towards pensioners by some people on this forum. For heavens sake, it's the last few years of your life. You are likely to be sick and frail. If you've worked all your life you deserve some reward.

I can see benefits in combining the two, people would be shocked to find out their real tax rate. Pensioners could be given higher tax codes to compensate.

Edit: State pension could be calculated on tax paid over a working life. The more you pay in, the more you get out, higher rate tax, higher rate pension.

Edited by Bruce Banner
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No NI should not be rolled into tax.

People who pay in (NICs) should have better benefits than those who don't.

You have to be credited with 35 years of NICs for the state pension. Pension is reduced pro-rata for years less than this.

There seems to be real jealousy and spite directed towards pensioners by some people on this forum. For heavens sake, it's the last few years of your life. You are likely to be sick and frail. If you've worked all your life you deserve some reward.

Agreed. Sadly the young that are paying in now will have far less than the current cohort of pensioners as the government has spent all the future money buying votes.

Thee are a lot of very comfortable pensioners. It appears to be forbidden to ask them to share some of the costs. And please don't play the 'last years of your life' card. 25+ years retired is hardly 'the last few'.

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Agreed. Sadly the young that are paying in now will have far less than the current cohort of pensioners as the government has spent all the future money buying votes.

Thee are a lot of very comfortable pensioners. It appears to be forbidden to ask them to share some of the costs. And please don't play the 'last years of your life' card. 25+ years retired is hardly 'the last few'.

How do you know a future government will not be buying votes when you come to retire? It's impossible to predict future government policy, it's the luck of the draw, you could be better off than current pensioners, who knows?

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