Working OAPs face paying NI to f ix social care
WORKING pensioners could be charged National Insurance for the first time to help fix the social care crisis.
Treasury officials are examining the case for extending the NI system beyond the state pension age of 66 where it currently stops.
Insiders said the move would raise relatively modest sums but would have symbolic value as a new system to pay for care of the elderly that is not funded entirely by higher taxes on people of working age.
Boris Johnson and Rishi Sunak are thought to be close to a deal to cap social care costs. This would deliver the Prime Minister’s manifesto pledge to end the scandal that sees thousands of older people forced to sell their homes to pay the bills.
The ministers are eyeing an increase of at least 1 per cent in the NI rates paid by both workers and employers. The total cost could reach £10billion a year. The plan to raise NI has alarmed some Tory MPs as it breaks a separate manifesto pledge not to increase main tax rates. But there is also concern within Government the plan will be seen as unfair by younger workers if older people are asked to contribute nothing. At present, most working pensioners pay no NI, compared with the typical 12 per cent paid by those of working age.
The number of pensioners in work has risen sharply in recent years and is now thought to total more than 1.3million.
The Institute for Fiscal Studies (IFS) estimates the Government could raise around £1billion for every 1 per cent of NI levied on working pensioners.
Treasury modelling is thought to have estimated far lower returns – perhaps as little as £120million a year.
A Treasury insider said: ‘There is a fairness argument that if older people are going to benefit from a policy they should help fund it where they can afford to.
‘On the other hand, those over the state pension age have contributed NI all their lives and you could certainly expect to meet some resistance if you tried to extend it.’
Helen Miller, deputy director of the IFS, said there was a clear case for extending NI beyond the state pension age.
She said the current system ‘already embeds a pretty big tax break for people above retirement age’, adding: ‘If you were to raise NI to pay for social care you would not be starting from a level playing field.
‘Initially a lot of the spending would be on the older generation – we should not automatically exclude them from helping to pay for it.’
‘Fairness argument’