Year income tax free to tempt over 50s back to work ?

[Spet0789]

those like me who receive it after a lifetime of contributing to it, see it as something we deserve and not as a handout. And I say that even though I don't need it. It is the only benefit I have ever had and it will be taken away from me over my cold dead body!

That’s precisely when it will be taken from you!

Indeed, although I believe that spouses and widow(er)s may continue to get benefits after the demise of the contributor, for as long as they live.

Not sure that’s the case for the state pension, but as I never expect to get one I haven’t looked into it.

[Lootman]

those like me who receive it after a lifetime of contributing to it, see it as something we deserve and not as a handout. And I say that even though I don't need it. It is the only benefit I have ever had and it will be taken away from me over my cold dead body!

That’s precisely when it will be taken from you!

Indeed, although I believe that spouses and widow(er)s may continue to get benefits after the demise of the contributor, for as long as they live

Not sure that’s the case for the state pension, but as I never expect to get one I haven’t looked into it.

I am not au fait with the latest rules but my mother never worked and she collected a widow's pension for 17 years after my dad died, on the basis of his earnings and contributions.

Why do you think you will never collect a state pension? If you factor in pension credit and the credits given to non-working raisers of children, almost everyone gets a SP or equivalent. Unless you are a recent immigrant or spent most of your life in prison.

[Urbandreamer]

Why do you think you will never collect a state pension?

It's a fairly common and understandable belief that people of a certain age entertain.

They are aware that the UK state pension is a "pay as you go" scheme that relies upon existing workers to fund the commitments made to former workers. They are also aware that the government has been increasing the retirement age to balance the books.
Finally demographics currently suggest a smaller workforce in the future.

Put all those facts together and, unless something changes, what do you get?

Of course it is very likely that things will change. There are some very easy solutions, that our current government would find unpalatable.

[Spet0789]

Why do you think you will never collect a state pension?

It's a fairly common and understandable belief that people of a certain age entertain.

They are aware that the UK state pension is a "pay as you go" scheme that relies upon existing workers to fund the commitments made to former workers. They are also aware that the government has been increasing the retirement age to balance the books.
Finally demographics currently suggest a smaller workforce in the future.

Put all those facts together and, unless something changes, what do you get?

Of course it is very likely that things will change. There are some very easy solutions, that our current government would find unpalatable.

Spot on. I expect to retire in my 40s with a level of wealth that means I will never pass a means test. The state pension is a pyramid scheme. The triple lock will go first and then the whole thing has to become means tested.

[Spet0789]

those like me who receive it after a lifetime of contributing to it, see it as something we deserve and not as a handout. And I say that even though I don't need it. It is the only benefit I have ever had and it will be taken away from me over my cold dead body!

That’s precisely when it will be taken from you!

Indeed, although I believe that spouses and widow(er)s may continue to get benefits after the demise of the contributor, for as long as they live

Not sure that’s the case for the state pension, but as I never expect to get one I haven’t looked into it.

I am not au fait with the latest rules but my mother never worked and she collected a widow's pension for 17 years after my dad died, on the basis of his earnings and contributions.

Why do you think you will never collect a state pension? If you factor in pension credit and the credits given to non-working raisers of children, almost everyone gets a SP or equivalent. Unless you are a recent immigrant or spent most of your life in prison.

I am not an immigrant and thus far have avoided prison. I’m in my 40s and am sure that the state pension will be means tested by the time I get to 68.

[Charlottesquare]

This policy would be demented. A gift to the richest in society.

How about one of these policies:

1) Fund free childcare for parents returning to work.

2) Tell the retired over 50s that they will be liable for income taxes on an assumed £30k of wage earnings whether they work or not. They can then choose whether to pay the tax or return to work and earn tax free.

Or take their assets and emigrate.

[Charlottesquare]

That’s precisely when it will be taken from you!

Indeed, although I believe that spouses and widow(er)s may continue to get benefits after the demise of the contributor, for as long as they live

Not sure that’s the case for the state pension, but as I never expect to get one I haven’t looked into it.

I am not au fait with the latest rules but my mother never worked and she collected a widow's pension for 17 years after my dad died, on the basis of his earnings and contributions.

Why do you think you will never collect a state pension? If you factor in pension credit and the credits given to non-working raisers of children, almost everyone gets a SP or equivalent. Unless you are a recent immigrant or spent most of your life in prison.

I am not an immigrant and thus far have avoided prison. I’m in my 40s and am sure that the state pension will be means tested by the time I get to 68.

Which party will introduce this and hope to be elected again? Sure, they can, but are they really that confident about their votes?

The catch is that even young voters who have not paid in for years have parents and grandparents who have, and likely will be impacted (or believe they will be impacted), pensions cannot be fought with the electorate on an old and young divide and rule basis without very real electoral danger. (though they may chip at it re triple locks etc)

[vand]

Another stupid and unworkable suggestion from an ideologically bankrupt administration. Sunak is a moron who doesn't understand basic economics.

Carrot and stick incentives that target specific groups are never the solution to long term structural problems. You need to think from the ground up, designing a system that incentives and benefits everyone.

If you want more over 50s back in work then let them do so on equal footing - design a tax system that benefits both the 55yo AND the 25yo.

[Urbandreamer]

Another stupid and unworkable suggestion from an ideologically bankrupt administration.

To be fair to this administration, because I do think that if we are unfair we are worse than them.

The idea is a rummer. Not a suggestion from the administration. If you follow the link and ignore the photo of the PM, you find that a unknown source has said that senior (unidentified) ministers supposedly have been talking to the treasury.

For anything to come of ANY idea, a bill would have to be submitted for debate, not a request to the treasury to consider an option.

It's perfectly fair for us to consider and debate the idea, or indeed for MP's and civil servants to do so. That doesn't mean it's more than an idea to think about.

[ayshfm1]

If you want more over 50s back in work then let them do so on equal footing - design a tax system that benefits both the 55yo AND the 25yo.

Indeed

For some, potentially those who would have generated the most tax, the rules currently translate into... Carry on working, probably in a stressful full on job and pay huge amounts of tax. Retire, times your own and pay little to no tax. Assume you've got a big pot, look at the tax advantages - NI stops, 25% lump sum, 12.5k personal allowance, saving's allowance, offshore/onshore bonds and dividend tax allowance (this one will be largely closed soon).

Once that person exits the workforce, I doubt they will be going back, so Government/Treasury is going to have admit it dropped the ball and put in place measures to stop them leaving in the first place. Which IMHO is going to be stick rather than carrot the easiest way is use age, they will likely drop the longevity argument and simply be honest and go with a pure fiscal one.

I don't really hold minsters to account either, they are politicians and where revenue raising is concerned they devolve this to civil servants who are well educated, highly paid and are supposed to research and model then present a proposal that weighs up the pro's and cons. The brief probably goes, suggest measures to raise the money.

Sadly they are also largely left wing, wokies on indexed linked final salary pensions which I think rather colours the modelling results and the measures suggested. I've slowly concluded that the top 20% of civil servants should be political appointments, that way an incoming Government can ensure all the obstructive ones who don't have a shared political objective are got shot of on day one.

[vand]

If you want more over 50s back in work then let them do so on equal footing - design a tax system that benefits both the 55yo AND the 25yo.

Indeed

For some, potentially those who would have generated the most tax, the rules currently translate into... Carry on working, probably in a stressful full on job and pay huge amounts of tax. Retire, times your own and pay little to no tax. Assume you've got a big pot, look at the tax advantages - NI stops, 25% lump sum, 12.5k personal allowance, saving's allowance, offshore/onshore bonds and dividend tax allowance (this one will be largely closed soon).

Once that person exits the workforce, I doubt they will be going back, so Government/Treasury is going to have admit it dropped the ball and put in place measures to stop them leaving in the first place. Which IMHO is going to be stick rather than carrot the easiest way is use age, they will likely drop the longevity argument and simply be honest and go with a pure fiscal one.

I don't really hold minsters to account either, they are politicians and where revenue raising is concerned they devolve this to civil servants who are well educated, highly paid and are supposed to research and model then present a proposal that weighs up the pro's and cons. The brief probably goes, suggest measures to raise the money.

Sadly they are also largely left wing, wokies on indexed linked final salary pensions which I think rather colours the modelling results and the measures suggested. I've slowly concluded that the top 20% of civil servants should be political appointments, that way an incoming Government can ensure all the obstructive ones who don't have a shared political objective are got shot of on day one.

Henry Hazlitt wrote:

The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences.


We are where we are today because too many "bad economists" had had influence over the economy for too long. Direct legislature and incentives aimed at particular groups without consideration for the invisible but real effects those policies have on the other groups.

[Sunnypad]

This policy would be demented. A gift to the richest in society.

How about one of these policies:

1) Fund free childcare for parents returning to work.

2) Tell the retired over 50s that they will be liable for income taxes on an assumed £30k of wage earnings whether they work or not. They can then choose whether to pay the tax or return to work and earn tax free.

No 2 is mad, why?

Also, is the tax take behind this idea? I'm not clear why it's being proposed.

[Snakey]

Haha, sure I would, but looking at the source of that link I assume it falls into the category of catnip for internet warriors looking for something to get furious about despite there being no serious suggestion that it'll happen.

I'm 50 and left work 18 months ago. My annual income would have been in the region of £125k had I not needed to shelter some in pensions, and I believe salaries in my profession at this level have increased by 15-20% since then. The tax saving alone would be £50k+, and the total would literally fund a six-month world cruise. And if you were only there for a year you'd avoid the longer-term stress of the role, and no need to worry about office politics.

As for the "why would anyone take you on, though?" side of things, I'd go for a fixed-term contract - maternity cover or whatever - to avoid the problem of how to convince a potential employer that you wouldn't just leave after a year. The risk that you'll come in with a "this is beneath me" attitude still leaves you a better option for the business than most CVs from other candidates who are "prepared to consider a temp role" aka cannot get anything else, which in my experience show a job history full of short stays and unexplained gaps indicating serious long-term issues with performance, personality, reliability etc.

I was mulling, the other day, over the wider question of "what could this or any government possibly do to get me back into the workplace?" and came up with the answer "nothing". Who pays the piper, calls the tune, and the flip side of that is that if you are not reliant on any State benefits then there is nothing "they" can do to make you do anything - or at least, not without bringing in a set of rules that will clobber everybody else as well. It would have to be carrots all the way, and they'd have to be very big and juicy ones as well.

Won't happen, though, so other than as a thought experiment there's little point getting into the detail.

[Adamski]

...am sure that the state pension will be means tested by the time I get to 68.

Be difficult politically to implement. Theyd be a lot of push back from pensioners We have arguably the lowest state pension in Europe, and already have a means tested element with pension credit and other benefits.

[ayshfm1]

I've considered means testing pensions a few times and always arrive at the same conclusion(s)

It doesn't address the loaded early retirees taking their pension, most of them either don't care about state pension or already assumed it would be gone before they can collect.

The mood music is bad, how to justify taking NI for all these years on the promise of pension, then renege on it.

Moreover there is no need - just bump up the age it becomes payable and kill two birds with one stone. I have heard whispers that 82 is where they want get to state pension wise, which would therefore be 72 for private pensions.

The math works just fine then.

[Spet0789]

This policy would be demented. A gift to the richest in society.

How about one of these policies:

1) Fund free childcare for parents returning to work.

2) Tell the retired over 50s that they will be liable for income taxes on an assumed £30k of wage earnings whether they work or not. They can then choose whether to pay the tax or return to work and earn tax free.

No 2 is mad, why?

Also, is the tax take behind this idea? I'm not clear why it's being proposed.

I completely agree number 2 is mad, but it’s less mad in my view than the original suggestion to allow over 50s returning to the workforce to pay less tax and achieves the same objective, which is to provide an incentive for retired people to return to work.

[JohnB]

The big problem with the proposal is that its based on greed. If you accept that the FIREd have done the calculations, and developed a portfolio to weather storms like the current one, they don't need more money. And if they were motivated by money, they'd still be in work to either buy ever more stuff or accumulate a bigger heap of gold.

Can you really expect the FIREd to give up their comfortable hobbies to get through interviews, revive rusty skills in a changed workplace for just a year's tax break.

If I were in 20 I'd be livid that I was scrabbling to save for a house while paying high rates of tax and student repayments while 50somethings with paid off houses and fat savings paid nothing. If I were 30 and ambitious I'd say why are these old fogies taking the specialist jobs I'm ready to move up to. And a tax break is irrelevant at minimum wage levels.

When I stopped working as a supercomputer expert, I didn't view it as supercomputing not getting done in the UK economy, but someone else being delighted to get the work.

Overall, a daft strawman

[tjh290633]

It strikes me that if you want to get people back into work, one method might be to abolish the higher rates of tax. Abolishing the limit on pension funds would also make sense. I have a feeling that amalgamating income tax and NICs might also help.

Some changes in personal allowances for those above state pension age would be needed.

TJH

[AsleepInYorkshire]

How would those already over 50 in a job feel about working next to a returnee
I would be so annoyed

Hi Paul,

Fairy snuff . So why don't we consider that all over 50's get some form of dispensation? Why doesn't the governement raise their personal tax allowance? Would it work? What would it cost? There must be a way of attracting over 50's back into the work place or are "we" trying to treat the symptom not the cause?

I think the problem is that most of us over 50 have been "whipped senseless" by a system that "drives efficiency". And it's relentless. We have a total lack of middle management that is fit for purpose and a ruling elite that have turned their back on anything other than making themselves richer.

It's a good point Paul. Excellent in fact. But, how can we fix it?

AiY(D)

[ayshfm1]

I think I'm with snakey, what could they do induce me back into the workplace? Pretty much nothing I concluded.

So whilst fiscal changes are responsible for causing people to jump and making sensible changes here might keep someone working longer, once they force a person out, provided they have planned their fire properly, I just can't see any coming back.

The Treasury is going to have own it's error and stop fiscally forcing the high tax payers out in the first place and view the ones it already has as spilt milk.