Back to all papers

All in this together? Why over-65s should pay National Insurance

There is currently an imbalance in the UK tax system. As things stand, workers stop having to pay National Insurance contributions (NICs) when they reach state pension age, effectively giving workers who continue at their jobs a pay rise at the expense of the general taxpayer.

The rapid increase in the number of workers who have chosen to continue working beyond state pension age over the last decade means that the amount which is lost to the treasury because of this concession has risen significantly.

Attempts to calculate how much additional revenue levying NICs on over-65s would raise has suggested it could be around £2 billion, money which would play a useful role in alleviating the current UK debt crisis or paying for some of the costs of Britain’s ageing population.

There is also some evidence that older people have been affected less severely by the impacts of the recession than other age groups, which suggests it would be fairer to impose a tax increase on them in order to show that, in David Cameron’s expression “we are all in this together” when it comes to repairing Britain’s public finances.