Middle-aged workers have quit the workplace in droves since the pandemic, with the number of jobless 50 to 64-year-olds rising to 3.6 million. Two in five cite sickness or disability as their reason for leaving work.
The UK is almost unique among rich developed countries in having a workforce that is smaller than before Covid, attributed in part to older professionals taking early retirement.
Does any other country have over 100% marginal tax rates on those with a decent pension pot?
Why shouldn’t the two uniques be linked?
“Older workers are hugely experienced and should be championed by ministers,” he said. “We shouldn’t turn our backs on this generation who have talents, skills and abilities and so much more to contribute.
Interviews conducted by prospective employer’s 28 year old HR dept bimbo who knows sod all about anything.
Tell the recruitment agencies that we need to bring elder workers back into the market. See how much good it does you.
I threw in the towel for three reasons.
1. When my missus died, I just didn’t want to keep our business going any longer.
2. The government has gone out of its way to dstroy the self employed especially in the IT sector. It was not worth my while chasing jobs.
3. As far as the recruitmnent agencies were concerned, I was too old to work in the industry.
People make decisions in the light of their own circumstances. Circumstances dictated in part by arbitrary rules the government has made. Of course, you could ask the people why, but better to just make up the reasons to fit some agenda.
I was chucked out of my IT job in Texas when the firm was bought by a competitor in order to eliminate it. Choice of selling or being litigated to death. Constructive destruction. I was 68, seemed like time to pack it in. Very glad not to have been working this last couple of years.
Lack of economic freedom to boot:
-for the rich, you might keep earning if you could buy a swanky house
-for the disabled or if you’re just gradually losing your faculties, you might keep working if it was legal to earn between £5-£9 hour in something you enjoy
I wonder too if any other country makes it so hard to get a job ‘cos you’ve got to prove to government (not to employers or customers) that you’re not a noncer with a DBS check, or go out of its way to promote the black economy by making drugs and brothels illegal.
I’ve lost count of the number of jobs I’ve applied for, been turned down for being only a 95% match, and then seen re-advertised. If they’re *that* desperate for employees, they shouldn’t turn away applicants. If you’re desperate, you take whatever you can get, not stubbornly starve to death demanding an exact match to turn up.
I got retired because the business I was in (the evil knocking on doors at midnight and demanding vast sums for patent infringement) suddenly stopped being as remunerative as it used to be (something to do with you haven’t actually suffered any loss if you haven’t actually lost sales because someone has stolen IP that you are actively practicing in products you’re shipping) – and I’d stepped away from that biz for a couple of years to do research, so the slot disappeared.
But there was the nice ‘years of service’ goodbye present.
But alas what I noticed was that I missed arguing about how to fix hard problems with smart people, so I took up employment again – the pay’s remarkably small, but it does represent actual profit; and I work from home with occasional visits to Spain for the workplace, and all in all not too bad.
But omigosh, the computer architecture business really is very very very conservative. There’s a grand reluctance to look at anything other than how grandpa used to do it. And no, RISC-V isn’t the cure for this – it’s even more of the same.
So perhaps it’s time to turn my back on employment and just have fun.
[yes, there are good reasons for some conservative behaviors – a computer is only useful to you if it runs software you have, so gotta be careful about that. But there’s perhaps an order of magnitude of wasted/missing performance in today’s machines…]
“suddenly stopped being as remunerative as it used to be (something to do with you haven’t actually suffered any loss if you haven’t actually lost sales because someone has stolen IP that you are actively practicing in products you’re shipping)”
Well, yes, sorry about that. I was one of those arguing that this should be so, rather than the earlier set up. Not that my parps into the hurricane had anything to do with the change of course…..
“Does any other country have over 100% marginal tax rates on those with a decent pension pot?”
Does any country on the Continent (bar the Kingdom of the Cloggies) have the widespread ownership of personal and occupational pensions that we have? Don’t they largely have to wait to reach their State Retirement Pension ages before they might choose to chuck it in? Come to that it may be easier to retire early in a country, and generation, with lots of owner-occupied housing. Once the mortgage is discharged you feel life is rent-free.
There’s my explanation: many incentives coming together. So I’d look for a few more incentives too e.g. that after roughly 35 years of making National Insurance Contributions you are unlikely to need to work on to make more. Even if you are a little short you can buy the missing contributions for a pittance and so qualify for a full State Retirement Pension. Any other offers?
I’d be really grateful if Tim could explain how marginal rates end up above 100%. I’m not arguing, I’d just like to see the calculation. Not least because I’m a pension fund trustee and have been heavily involved with the lecturers’ pension scheme, USS.
https://www.resolutionfoundation.org/press-releases/childrens-benefits-mess-leaves-families-facing-effective-tax-rates-of-80-to-96-per-cent/
Some more examples here
https://www.taxpolicy.org.uk/2023/01/01/5ways2fix/
This is one example of marginal tax rates (ok, marginal withdrawal rates) being over 100%
https://twitter.com/Sam_Dumitriu/status/1610272715142840321
Unlikely to affect people 55+ though, unless you had children late, or became grandparents with care due to unforeseen circs.
Many examples in the 50-60k range of withdrawal rates being very high too due to Child Benefit being withdrawn when higher earner gets more than 50k (lower in SCO).
I suppose the real 100% rate is observed in behaviours – what else could I do with my time that is worth something to me as a spiritual social person – if the marginal rate is 68.5% (true in the 100-125k range if no kids), but the value of the time, plus the costs of the travel and exes saved is 31.5%+, then you will turn down the extra shifts or hassle.
Times have changed. What was common practice in the workplace 20 years ago is apparently no longer acceptable. As such it’s not surprising that the workforce that was successful and productive no longer wants to play. There is probably a strong correlation to falling productivity too.
Thanks to Gordon Brown it also has a 100% tax rate on those with small occupational pensions. Any pension smaller than the difference between the basic state pension and thwe pension guarantee is effectively confiscated. Gordon Brown’s handout to the feckless and spendthrift at the expense of the nearly-as-poor hardworking and thrifty.
@John77
Gordon Brown’s stupid policy did well by me. His “A Day” pension reform allowed me to put nearly 100% of my salary into my pension pot so I payed no income tax, and the investment gains in my pension pot were tax free too. I lived by pulling money from my flexible mortgage, then payed off the mortgage with the 25% tax free allowance from my pension when I took early retirement. Sadly this great way of building a pension fast has now been closed with reductions in Lifetime Allowance and a cap on pension contributions.
@ Andy F
Yes, it clearly did. Just one of the reasons why New Labour was the only UK government in my lifetime to simultaneously make the rich richer and the poor poorer.
Tim
Not to worry. I had been shocked at so many granted patents were worthless, obvious or bullshit, so I always did ‘defense’, not ‘attack’. I think I prevailed about 98% of the time; but then our inventions were better reviewed before being accepted as worth trying to patent than the average patents out there.
The new approach is a much better compromise than the old one.
I think unpracticed patents do have some value; but the value to the patent owner is clearly ‘not that much’, since it wasn’t worth embodying in any product.
And the new practice might – might – reduce the volume of patents-for-the-sake-of-patents that has plagued the semiconductor/computer/etc industry for so long; and that might lead to many fewer, better, patents better examined by examiners with more time. And that might – might- lead to a different practice in the industry, where you actually actively look through the reasonably few good patents to discover ones that teach you how to do something you didn’t know how to do, and thus push you to license said patents. This saves you time to market (given timely negotiations), and improves your efficiency; and gives a value to patents that you don’t practice but which are licensed.
Gee, incentives matter.
Who knew?
Yup. That was my experience as well. With the penal rates of IR35, they’ve effectively taxed IT contracting out of existence. I was surprised when Liz Truss said they were going to revoke much of the later horrors and even started preparing to go back to work in April 2023.
With the Rishi Sunak coup d’etat it looks like that’s all gone up the shitter, so here I am in semi-detatched retirement aged 55 and likely to remain so.
The obvious solution is that we should put on the show. Ourselves! Right here in the barn!
Ottokring: “The government has gone out of its way to dstroy the self employed especially in the IT sector. “
John Galt: “With the penal rates of IR35, they’ve effectively taxed IT contracting out of existence.”
What I have started doing is contracting through a Swiss agency. That cuts out IR35 and VAT. For the last year, I’ve been raking in money like I’ve never raked in money before.
It also means the timesheet/payment admin is done with Swiss efficency.
Conversion of CHF to GBP has been easy, using an outfit called Revolut.
You might want to contact https://www.swisslinx.com/
surely middle aged is 40 to 50? Or perhaps even 35 to 45. Actually I would have said that this only really applies to those who work in the public sector and who have managed to gather together enough entitlement from a gold plated pension!