Government considers extra tax on older workers to pay for care

Government considers extra tax on older workers to pay for care

Jeremy Hunt proposes new rules meaning workers past pension age will pay national insurance

Monday, May 7, 2018

Jeremy Hunt will propose that workers over state pension age should pay national insurance. 

In a green paper to be published next month, the Health and Social Care secretary will put forward the plans, which are intended to make up a shortfall in funding for care for the elderly.

Under current rules, employed people stop paying class 1 national insurance when they reach state pension age, which is currently 65 for men born before 6 December 1953 and between 60 and 65 for women born between 6 April 1950 and 5 December 1953.

The state pension age is already set to increase to 66 by 2020.

At present, 1.3 million people are working beyond state pension age, and that figure has been increasing year on year.

The new proposals are predicted to raise an extra £2 billion, and that money would go straight into the social care system.

Lord Willetts, chair of the intergenerational commission, told the Sunday Times: "If you have a 67-year-old working alongside a 57-year-old doing the same job for the same pay do we really say that the 67-year-old should take home more and have lower deductions?"

But Baroness Roz Altmann, former pensions minister and campaigner, told Julia Hartley-Brewer this morning that the exemptions to national insurance payments encouraged people to work longer.

"National insurance is different from ordinary tax," she says.

"It’s supposed to pay for all sorts of benefits that those who are over pension age are no longer entitled to such as building up more state pension.

"A lot of people enjoy working longer, but not necessarily full time, and it’s a huge benefit to the economy.

"Some people aren’t well enough, some poeple are wokring longer beause they’ve got no pension and need to make ends met, and the truth is it’s beneficial to society to encourage people to work longer and that’s why people over pension age don’t pay national insurance, but their employer still pays national insurance.

"The last thing we want to do is make people think ‘I don’t want to work past pension age’, it’s good for society because those poeple will have more money later in life as well."