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Don't you just love the Tory Government.

Jonpe
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Re: Don't you just love the Tory Government.

The national minimum wage for someone 25+ years old working 40 hrs/week works out at approximately £16,290 p.a.  This would be taxed at about £888, and NI contributions of some £1,230 would be payable.  I don't think someone earning so little would consider it trivial to have to pay some £2,100 of it in tax and NI.  It has always been my opinion that the personal allowance should be equal to the minimum wage, as should the threshold at which NI becomes payable by the employee, i.e. someone on the national minimum wage would not pay income tax or NI.

I've worked out that I, and presumably everyone else, will have to live 17 years 2 months and 27 days to get back what I would have got by taking my pension at my state pension age.  This does not include any interest I would have earned on the money.  If you continue working after state pension age and are in the 40% tax bracket, you won't have to live quite as long to get your money back unless you have other pensions/income taking you into the 40% income tax band in retirement.

The government's website is a bit confusing since it says someone with a NI number ending in the same two digits as mine will get their first payment on a Monday, and my state pension age is on a Monday.  So far so good, then it says, "Your first payment is made at the end of the first full week after you reach State Pension age."  So does that mean I get it on the Friday of the following week (11 days after I reach state pension age), and what happened to the Monday previously mentioned?  If I defer my pension it would appear that it becomes a bit simpler.

The page then goes on to give an example showing someone will not get a pension for the first five or six days after reaching state pension age simply because of what digits their NI number ends in.  I didn't know NI numbers doubled up as a lucky (unlucky) dip lottery.

https://www.gov.uk/state-pension/what-youll-get

VileReynard
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Re: Don't you just love the Tory Government.

Don't forget that they will, in addition, tax your pension income, should you be so lucky to live long enough to reach your pension age in perhaps 45 - 50 years time?

"In The Beginning Was The Word, And The Word Was Aardvark."

Jonpe
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Re: Don't you just love the Tory Government.

I'm not quite sure what you are saying; pensions are taxed as income.  The state pension is taxed 'at both ends' as it were, i.e. your NI contribution is not tax deductable, unlike contributions to other pension schemes.

VileReynard
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Re: Don't you just love the Tory Government.

Contributions into your pension are tax-free;

Payments out (after retirement) are taxable.

"In The Beginning Was The Word, And The Word Was Aardvark."

Champnet
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Re: Don't you just love the Tory Government.

@Jonpe  is referring to NI Contributions on the assumption some of it goes towards the State Pension.

Minivanman
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Re: Don't you just love the Tory Government.

NI is just another form of taxation which as I understand it goes into some sort of general fund.

How much of that goes towards our pensions I have no idea - I guess the lions share is given over to the NHS. Now of course pensions are slowly but surely becoming separated by those workplaces pensions over and above NI and supplemented by your employer. But not to worry, you put in £40 for example, your employer puts in £30 and whoopee, you get £10 tax relief!

State pension, what was that future generations will ask when it has mutated into some sort of means tested benefit which in a way it already has with the ever dwindling entitlement to that pension credit supplement.

What Labour gave, the Tories seem determined to take back.

Jonpe
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Re: Don't you just love the Tory Government.

@VileReynard, Yes, I know that our contribution to other pensions is tax deductable, but our contribution to the State Pension isn't, regardless of which pot it comes from.  As I have expressed on this forum in the past, NI is just another form of taxation enabling the government to pretend we are a low-tax economy.

Champnet
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Re: Don't you just love the Tory Government.

Graduated pension contributions in the 60’s & 70’s was the only Government wage deduction taken specifically towards retirement pension.  It was earnings related, I recall paying between 6d and 1/- a week.  From it I now get about £3 a week. I have to assume the rest of my pension is an unearned charitable donation made by the Chancellor from the big tax pot that everyone is paying into today.

VileReynard
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Re: Don't you just love the Tory Government.

I hope you haven't forgotten your Winter Fuel Payment (£100) & Christmas Bonus(£10)

Although one can receive these at any age - if you are considered semi-destitute, but they are automatically handed out to those receiving the state pension.

"In The Beginning Was The Word, And The Word Was Aardvark."

Champnet
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Re: Don't you just love the Tory Government.

More unearned income, is there no end to the Government’s generosity ?

 

VileReynard
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Re: Don't you just love the Tory Government.

Seems not - those little extras are tax free. Thumbs Up

"In The Beginning Was The Word, And The Word Was Aardvark."

Jonpe
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Re: Don't you just love the Tory Government.

With my luck, or lack thereof, the age at which the winter fuel payment becomes payable was moved from 60 to state pension age just before I reached 60.

Can you still claim it even if you defer your state pension, and what about the Christmas bonus (surely that doesn't go up by 5.8% per year if you defer your pension)?

VileReynard
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Re: Don't you just love the Tory Government.

It's simple! Grin

Eligibility

To get a Christmas Bonus you must be present or ‘ordinarily resident’ in the UK, Channel Islands, Isle of Man, Gibraltar, any European Economic Area (EEA) country, or Switzerland during the qualifying week.

You must also get at least one of the following benefits in the ‘qualifying week’ - this is normally the first full week of December:

  • Armed Forces Independence Payment
  • Attendance Allowance
  • Carer’s Allowance
  • Constant Attendance Allowance (paid under Industrial Injuries or War Pensions schemes)
  • Contribution-based Employment and Support Allowance (once the main phase of the benefit is entered after the first 13 weeks of claim)
  • Disability Living Allowance
  • Incapacity Benefit at the long-term rate
  • Industrial Death Benefit (for widows or widowers)
  • Mobility Supplement
  • Pension Credit - the guarantee element
  • Personal Independence Payment (PIP)
  • State Pension (including Graduated Retirement Benefit)
  • Severe Disablement Allowance (transitionally protected)
  • Unemployability Supplement or Allowance (paid under Industrial Injuries or War Pensions schemes)
  • War Disablement Pension at State Pension age
  • War Widow’s Pension
  • Widowed Mother’s Allowance
  • Widowed Parent’s Allowance
  • Widow’s Pension

If you haven’t claimed your State Pension and aren’t entitled to one of the other qualifying benefits you won’t get a Christmas Bonus

Sad

When it was launched by Ted Heath's Tory government in 1972, the bonus payment was worth £98 in today's money. But that £10 bonus was then worth more than the £6.75 per week state pension.

"In The Beginning Was The Word, And The Word Was Aardvark."

Champnet
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Re: Don't you just love the Tory Government.

I reached retirement age in Sep 2014, I deferred the state pension for 2 years. I received the first Xmas box in Nov 2016 so it looks as if you have be taking the pension to qualify.

Minivanman
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Re: Don't you just love the Tory Government.

The thinking behind it perhaps that it you do not need a pension....

Personally, I think we should get a tenner for each grandchild we have, they cost us a small fortune at Christmas!