Why do we have to pay tax on our government pension?

Question

I am fortunate that I have a Company pension on which I pay tax I don'y like it but accept it as a fact of life

I have paid into the goverment by law for over 45 years why should I be taxed it seems like Peter robbing to pay Paul

Answer 1

I'm no expert on this issue, but I would ask that look at just how much $ you personally contributed to your pension account before retirement and compare that amount with how much you are receiving now...do the math and see how much more money you stand to collect above what you paid in over the years. Sure, there is the aspect of interest income from your contributions, but I suspect that you will find that your retirement payout FAR outweighs any contribution you made in the past....In other words it is "income" for you.

You, like myself, should count ourselves as lucky that we have pension plans...most younger folks don't have that kind of security that we tend to take for granted.

My last thought on this is that I would suggest that we should not consider retirement from employment as being a time when we no longer maintain any responsibility to contribute to our nation and community.

These are just my thoughts on the subject, everyone is welcome to embrace a different view. Blessings...

Answer 2

Company pensions differ from the state pension in that the money you pay in (or your employer pays as part of your remuneration package) has not been taxed. You earned the money but were allowed to defer paying the tax until you retired. This seems quite fair. You are only paying tax once on the income - it is just a long time after you earned it.

State pensions are funded differently. There is not a pot of your money waiting for you to retire. The system is (and has been since it was set up) that the pensions in any one year are funded from the tax contributions in that year.

Consider the position if pensions were paid tax free. In each of those 45 years you have had earnings and paid tax, pensioners would not have been paying tax on their pension income.

The books have to balance eventually so the tax rates would have had to have been higher in those years.

Taxing the pensions prevents the silly situation which could occur where a low earner would be paying lots more tax than someone with a pension income much higher.

Answer 3

Taxes are not a fact of life as some like to put it. They are only required to be paid by individuals that have a TAX LIABILITY. If you dont have the liability then you dont have to pay.

If the money you are receiving is from the government then the tax is valid. Since you are receiving monies from the government and the government can tax anything it controls, it therefore has the right to tax this benefit. Sorry.

Now if you were getting remuneration from a private employer...that would be a totally different story. In that case I would really encourage you to read the law and educate yourself. You will be pleasantly surprised at what you find.

Answer 4

Yes, it seems unfair. However, when you paid into the pensions scheme you were allowed tax relief, be it at basic rate or at higher rate if you were a higher rate tax payer. When you get the pension, it is considered your taxable income. Similarly if state pension, together with other income (interests, rent receivable, company pensions etc) exceed your personal allowance, you pay tax. Unfair? What about people not earning, having lots of children , living in council houses, entitled for every state benefit.... also get paid for "old peoples" home bills .. While you work hard, pay tax, save hard, pay tax on pensions, pay for your own old age problems and when leave the planet, your beloved pay lots of inheritance tax as the exemption is way- out-of date compared to the souring house prices.. At least your main residence should be exempt .. should not it be?

Answer 5

It's another systematic FRAUDULENT ta tic that all governments implement. I agree with you but it goes way beyond Peter robbing Paul. It's like taking away the necessities from a new born. Yet you'd would want them to feel as comfortable as possible. What a shame!

Answer 6

no person is getting a tax decrease. We merely desire to maintain an identical tax expenditures we've had for ten years. The Obama administration desire's to advance taxes on each couple making extra desirable than $250,000. Taking money out of the interior maximum sector interior the path of a recession is the different OF STIMULUS.

Answer 7

Just like paying tax on your earnings in the first place then having to pay VAT on goods you buy with those earnings, or fuel duty etc etc. Just another good way to take more money out of our pockets and we let them get away with it by voting them back in every time!!!!

Answer 8

Is it income?

Do you also earn from other sources?

There's your answer.

Sorry to be a spoilsport