Sunday, 28 April 2013

Wealthy pensions should hand back freebies!

WTF? Just heard this suggestion on the news!

So people that have worked hardest to earn the most and put that in to the state should hand back some of the freebies they validly get from the state in their old age, like bus passes and free TV licences.

Why is it seen as bad to work hard and make some money? Is that not what the economy needs?

I, and many others, pay a shit load in tax and NI, and the very idea that I should forgo what I am entitled to is offensive. Sorry.

I'll claim every damn penny I am entitled to from the state given the chance, just like everyone else.

We pay for the state, some of us more than others, so why the hell should we not benefit from it!

When I do retire, if ever I do, I may damn well need it. Nobody knows how the future will pan out.

It is not a matter of "the more you pay in the more you get out", obviously. The whole notion of any state welfare is a fundamentally socialist view - but that would mean something like: "Some pay in more than others but we are all entitled to the same out of the state regardless". What seems to be suggested here is one where "The more you pay in the less you are entitled to get out" which is sort of pushing socialism too far and turning it inside out. It sounds like a Monty Python sketch now "stop that, it's silly!".

6 comments:

  1. Bloody right as well, you have paid in plenty over the years so why not get back some of what you have paid in later in life x

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  2. It's politically very simple; the Conservatives have promised to cut the deficit. They've also promised to not reduce or means-test pensioner benefits. These two promises are in conflict, as they've now got to the point where the only chunk of the budget that they can cut without causing pain is benefits for rich pensioners.

    So, they can't cut those benefits - that would break their promise to ring-fence those benefits, and pensioners *do* get out and vote. On the other hand, they need to reduce the bill for pensioner benefits somehow, otherwise they have to admit that they've failed at deficit reduction. Best they can do is beg pensioners to get them out of a hole...

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    Replies
    1. This is a brilliant comment.

      What the government should do is either means test the benefits in question or start taxing big orgs properly. I also hate how they're guilt-tripping people who legitimately claim entitlement but don't guilt trip big business not to tax dodge. Really nasty.

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  3. And surely the last people you would give it to is the government. I'd happily consider giving it to charity but back to the government, seriously?

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  4. "The more you pay in the less you are entitled to get out"

    I guess, speaking more broadly, that's kind of how our society has worked for a while; those who earn more will always pay more and much of this goes towards supporting the wider welfare state and thus the lower paid majority. You will always get less back unless you’re in that lower paid majority. But you make a fair point, whether it seems right or not.. society has promised certain things.

    In the grander scheme of things though you have to ask, how much would this idea actually save and more importantly.. how do you define "wealthy pensioners"?

    My mother has a fair bit in the bank but she's retired and thus isn't paying anything in. So that fairly small amount of extra interest (savings are tough right now due to low rates) that she earns just about supports her basic living costs when her state pension is included. Otherwise the cash is there to cover any unexpected medical problems or emergencies, which will invariably arise.

    Now in some eyes, if you just looked at the numbers, she might be defined as “wealthy”, simply for owning her own home and being sensible enough to save for later in life. But my mother is not rich. She has a fairly normal home, economy car and lives in a cheaper area to help keep costs down.

    Now somebody else with several million in the bank, well ok maybe they are indeed “wealthy” (totally ignoring the argument of principal here) and thus the cost of a bus pass or TV Licence probably won’t be too harshly missed. But then again how many people in this country are in that situation? Not so many.. so what you save by cutting those things is tiny.

    My fear is that in order to get any viable saving the state would need to define “wealthy” at such a level as to penalise many ordinary people simply for being sensible. But since those are the same ones who often vote Conservative then they won’t be able to do it. It’s an interesting political argument that rests atop the volcano.

    Mark
    ISPreview.co.uk

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  5. It depends on whether you view (the pension component) of National Insurance as a savings policy or insurance policy.

    If the former then, obviously, if you put more in you should reasonably expect to get more out and if you happen to have saved in other ways you shouldn't be penalised.

    If the latter then you should only draw on the fund if you need to.

    Now the fact that the name is National _Insurance_ should indicate what the creators of the scheme (OK, it's a long time ago now) thought - i.e that it was an insurance policy. And indeed initially it was - many people didn't reach "retirement age" and those that did usually didn't draw the pension for too long.

    These days it's not unreasonable to expect to live for 20 years past "retirement" age - even with the government pushing back the age at which one can draw a state pension so the figures don't stack up so well.

    If you earn £40k then you will pay about £4k NI - assuming someone starting on the standard £110 per week they would have needed to contribute for about 40 years (assuming inflation at 2.5% and slightly lower earnings at the start of your working life) to pay for 20 years of pension.

    I'd guess the average contribution is less than £4k per year which is why the scheme is in trouble and it will probably get worse with the move to a flat rate pension.. I'm not surprised George Osborne is not only trying to reduce his outgoings but perhaps trying to seed the meme that you should only draw a pension if you "need it".

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