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Benefits Freeze To Stop In 2020- Is This Timing A Bit Suspicious
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Am I the only one who is slightly suspicious and cynical of the timing.
Am I the only one who is slightly suspicious and cynical of the timing.
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pensions are not a benefit, those who get them have paid most of their lives, I reckon I've paid more than enough to cover when I get mine. Yes the structure is very poorly designed, yes no commercial pension works like that but the basic premise is valid. WSS who reach retirement without having paid in get what is what we used to call social security, yes that is a benefit.
//State pension is NOT a benefit. It has been paid for over many years of N.I. contributions and taxation.//
The problem is, Sparkly, that that statement does not apply to all recipients. Many recipients of the "pension" have contributed nothing at all, many more have contributed nothing like the sum needed to warrant the payments. Those in the former category do not receive a pension; they receive retirement age welfare payments.
But it is far more complicated than that. As mentioned, the structure of the pension scheme is such that it is incredibly unfair. The basic problem is basing the payments on "contributing years" instead of £££s. I pointed out in another thread last week that a person earning £100,000pa pays 36 times as much in NI contributions (on which the amount of pension paid is based) that somebody earning £10k. But they each receive the same amount of credit towards their pension - one contributing year. The whole system is a mess and it also run like a gigantic Ponzi scheme, where the payments made to current pensioners are paid for by current contributors - a model that would not be tolerated anywhere in the regulated finance industry.
It needs sorting and the first thing to do would be to separate recipients into two groups - those who have contributed to the scheme (who may properly be called "pensioners") and those who have not. Equally urgent is the need to establish a proper link between contributions paid in and payments paid out.
The problem is, Sparkly, that that statement does not apply to all recipients. Many recipients of the "pension" have contributed nothing at all, many more have contributed nothing like the sum needed to warrant the payments. Those in the former category do not receive a pension; they receive retirement age welfare payments.
But it is far more complicated than that. As mentioned, the structure of the pension scheme is such that it is incredibly unfair. The basic problem is basing the payments on "contributing years" instead of £££s. I pointed out in another thread last week that a person earning £100,000pa pays 36 times as much in NI contributions (on which the amount of pension paid is based) that somebody earning £10k. But they each receive the same amount of credit towards their pension - one contributing year. The whole system is a mess and it also run like a gigantic Ponzi scheme, where the payments made to current pensioners are paid for by current contributors - a model that would not be tolerated anywhere in the regulated finance industry.
It needs sorting and the first thing to do would be to separate recipients into two groups - those who have contributed to the scheme (who may properly be called "pensioners") and those who have not. Equally urgent is the need to establish a proper link between contributions paid in and payments paid out.
//….but sone may have been left with the impression there is no advantage in earning more than required to qualify for the basic amount.///
There isn't - at least not as far as the State Pension is concerned. Leaving aside extra contributions (which as Tora says is not what we're discussing) someone who has earned £10,000pa and who has 20 "contributing years" will get the same payment as someone who has earned £100,000 pa and has 20 "contributing years". At today's rates the low earner will pay £164 pa in NI Contributions whilst the higher earner will pay £5,967pa.
There isn't - at least not as far as the State Pension is concerned. Leaving aside extra contributions (which as Tora says is not what we're discussing) someone who has earned £10,000pa and who has 20 "contributing years" will get the same payment as someone who has earned £100,000 pa and has 20 "contributing years". At today's rates the low earner will pay £164 pa in NI Contributions whilst the higher earner will pay £5,967pa.
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