Boris Johnson and Rishi Sunak's announcement to increase the National Insurance charge on pensioner earnings to 12 per cent is alarming news for elderly people. Some MPs are demanding the abolishment of inheritance tax, which has been an integral source of cash for the government over the years.
Highlighting the danger, John Cullinane, director of public policy for the prestigious Chartered Institute of Taxation believes that the health and social care levy in National Insurance “in all but name”.
“One of the most interesting aspects of the levy is that it will apply to pensioners, albeit limited to their employment income.
“The Government will no doubt argue that this new levy is a special case but it is hard not to see this as setting a precedent making it easier to bring pensioner earnings within the full scope of National Insurance at some point in the future,” Cullinane added.
The Express reported, “Currently, nobody pays NI on earnings below £9,568. However, at that point it kicks in at a hefty 12 percent for workers below State Pension age. NI then falls to 2 percent on their earnings above £50,270. The new health and social care level will add another 1.25 per cent on top of this, hitting around 25 million people of working age.
Pensioners who continue working beyond State Pension age will also pay the 1.25 percent levy on their earnings from employment, although their income from pensions and savings will remain exempt for now.”
According to a publication, Dennis Reed, Director of Silver Voices, said this decision must be revisited before removing the earnings element of the triple lock this year.
"Our state pension is the worst in the developed world and millions of women were plunged into poverty by the raising of the state pension age with insufficient notice," he said. "£137-60 per week can't buy life's essentials, let alone cope with any household emergencies, and we urge MPs of all parties to vote against the scrapping of the triple lock in Parliament,” he told a news portal.
TUC, National Union of Students and National Pensioners Convention said in a statement: “For pensioners, it means a smaller than expected increase to their income next year. And for students and young workers, it will lead to lower state pensions when they retire.”
Even after 10 years of the triple lock, the UK state pension is lower than in most comparable countries. According to an analysis by Age UK, the rise in women’s state pension age from 60 to 66 has cut the number of female pensioners in the UK by around 800,000 since 2012-13.
But the number living in poverty has jumped by 260,000 – from 990,000 to 1.25 million. This means just over one in five elderly women are struggling to pay their bills in retirement. This compares to 23 per cent of men and 13 per cent of couples. In total, 2.1 million pensioners are now living below the breadline – 850,000 are men.
