Tuesday, 11 June 2019
Pensioners: two ends of the monied spectrum
Two announcements made yesterday affect pensioners at both ends of the monied spectrum.
As part of his pitch for the Tory leadership (and hence the premiership) Boris Johnson announced that, if he wins, he will raise the threshold for liability to the higher, 40%, income tax rate from £50 000 to £80 000 a year. The cost will be partly offset by making recipients of these high salaries pay more National Insurance Contritions (NICs) for which at present the rate drops from 12% to 2% for incomes above £50 000.
However, pensioners don't pay NICs, even if we are working and receiving lavish (or even modest) incomes. So he biggest beneficiaries of Johnson's largess to the rich will be people over 66, working or not, whose combined salaries, investment incomes and pensions exceed £50 000. Those on £80 000 will gain by about £3 000 a year, which is £60 a week.
They do not include me. Indeed I wonder what they do with all the money they already have. Maybe pay school fees for grand-children to give them an advantageous start in life
By contrast the BBC announced that it cannot afford to continue to provide free TV Licences to the over 75s. These cost £154.50, which is about £3 a week. About three million of us (yes, this one does include me) will lose this nice little perk.
Mrs May, still prime minister, is said to be disappointed, forgetting presumably that she was part of the government which dumped the responsibility for this payment from the government to the BBC back in 2015.
The poorest pensioners, who receive Pension Credit, will still be able to receive a free licence. (I'm not sure whether this il be automatic or they will have to apply) However, about 1.3 million families who are entitled to Pension Credit don't actually claim. These are often the very elderly or people with disabilities. So they will suffer most.
That's the trouble with means-tested benefits: the most in need often miss out.
Personally I have no objection to paying for a TV licence. I can well afford it. In terms of opportunity cost it's half a bottle of wine a week. (My tastes in wine are modest - I'm very happy with plonk, or le pinard, as the French call it.)
A solution I've suggested before is not to give these otherwise universal benefits to anyone who pays income tax. As a member of Liberty I am aware of the privacy implications of this but it does seem to me to be an acceptable way of avoiding the means-testing problem.
I am, however, ashamed to be living in a country where our leaders believe, probably rightly, that they will win elections by giving more to those who already have enough, and by taking away from those who have least.