Pensioners could have to pay National Insurance contributions on their income if the Government adopts a think tank's suggestions for paying for long-term care.

It could effectively raise the "tax rate" on income from 20pc to 32pc for retired Britons. Imposing National Insurance contributions (NICs) on private pensions would be one way to shift the burden of the forthcoming cap on care home costs to the people who would benefit from it, the Institute for Fiscal Studies (IFS) said. But charging NICs on pensions in payment at the same rate that applies to earnings would add a 12pc charge to basic-rate tax of 20pc – in effect a 60pc tax rise – and would be sure to cause outrage among pensioners. The IFS said the move would counterbalance the current exemption from NICs of employers' pension contributions, although employees' payments into pension funds are subject to National Insurance......Read more here