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Anyone working, or that has worked, either as an employee, an employer or self-employed, know that they pay National Insurance Contributions (their stamp) in good faith and that this will provide the money for their State Pensions, nursing care, and other allied benefits, as and when they retire.
Apart from paying towards the National Health Service, the bulk of these contributions are paid into the National Insurance Fund and was originally ring-fenced so the government could not use this money for anything else.
After paying for any particular year’s benefits, the surplus was put into secure long- term investments for terms of up to twenty years, earning reasonable interest.
At its peak the surplus was in excess of £52 billion although £13 billion was considered a reasonable cushion against any sudden rise in the cost of benefit claims, and now fluctuates between £30 -£40 billion.
These huge surpluses were probably created because, although the National Insurance Contributions went up because of the annual cost of living increases in wages, the State Pension did not, and today the UK has the lowest State pensions compared to major European Union countries, and we have a much older retirement age.
Although governments have not paid anything into this National Insurance Fund for at least the last twenty years, they are using the surplus money for other expenditure (despite the ring-fencing) and have gradually moved the surplus money into Instant Access type of accounts that only pays the current Bank of England bank rate. So over the years governments have not only removed the ring-fencing protection but also drastically lowered the rate of interest the surplus money was earning.
The present Coalition Government is now considering merging these National Insurance Contributions with general taxation, ie income tax, but there must be a worry that should we have another financial banking crisis, or something similar, what guarantee would we have that these State Pensions and other benefits will be safe. Perhaps this is simply to make their current activities legal although they are only copying previous governments, but it does expose a very real danger.
There is also some doubt that this National Insurance Fund actually exists, but it was established in its present form in 1948, the Government Actuary has to value it annually, and it exists to provide the money to pay State Pensions etc, so really the evidence suggests that it is a fact.
We are told that the government is considering a flat rate state pension for everyone who retires after some future date, but this will only apply to pensioners of the future and not include pensioners of today. WHY NOT? Perhaps it is just a ploy to persuade us to accept this merging idea by offering to give us something. Can we trust politicians?
The Blair / Brown Labour Government will go down in history as the government that destroyed the company final salary pension schemes. The Tories under Thatcher, will be remembered as the government that killed our State Pensions? CAN WE AFFORD TO TAKE THE RISK?
Pensioners of today simply want what they have paid in for, a decent State Pension and free nursing care when we need it, and if you remember the slogan at the time, it was `from the cradle to the grave’ cover by the National Health Service.
Please sign my petition to help the elderly. And the young when they are old.
http://epetitions.direct.gov.uk/petitions/40711
And your response to other things? Such as Elegrans very valid point at 13.20?
I have no doubt that you are sensitive, aren't the majority of us?
However I would expect someone who suggests doing away with a system to have at least some sort of proposal as to with what it might be replaced.
In 2010 there were 3.6 people earning money for each retired person, and since the recession has bitten deeper, it has probably gone gone down nearer 3 people. so if you add up what each pensioner gets between their standard pension and all the other possible grants, and double it, the cost of each person would be met by three people earning. If councils did not get any council tax, or its equivalent, there would be no local services for anyone, earning, retired or unemployed.
There would have to be some other way to fund all this.
Creative ideas on a postcard, please, addressed to 11 Downing Street.
In 1980 Margaret Thatcher broke the link which kept State pensions increasing with British prosperity, and Thatcher then introduced the excessively costly means test system. As a result of this one policy to date, millions of our pensioners live in poverty.
I have always believed Britain's pensioners should receive the full backing of their country. If anybody wants to join me. Ideas for positive action can be sent to me here.
Thanks, I'm sure.
Off to bed now, 'night all.
And me all!
Complacent Britain. ""I'm all right jack""..............
Ivanhoe
My father was a war veteran and I keep telling you he is very well looked after by the state.
My mother isn't well looked after. She's penalised because she has a small private pension so rather than being better off than my aunt who saved nothing she is worse off. My aunt could have saved but chose not to. She gets housing benefit and top ups. She also gets extra cold weather payments. My mother gets none of these.
I have no problem with saving for retirement but it's not right that those who were thrifty/able to are penalised.
There should be a minimum pension paid to all so that those who couldn't save have enough to comfortably live on and any extras like the £25 cold weather payments should also be universal.
VAMPIREQUEEN. Your right, the low State pension is the problem, coupled with the means test system which penalises those who have been able to save.
What is needed is a minimum State pension paid to all pensioners as a right and based on a working life of NI contributions. And I say most certainly a lot higher than it is today. I would advocate at least a £250 to £300 a week single pensioners State pension level, because Britain's State pension is the lowest in Germany, France ect. I would be interested in what you think the level of State pension should be VampireQueen ?
It is a fact that the means test system for pensioners is costing excessively more of tax payers money than a decent up rate in the State pension would cost, I believe the disparity in costs is something like 20 times more costs in means testing.
However, I have never believed that costs should come into the well being of our elderly people.
In longevity terms alone, this generation should be looked after by being paid a decent State pension, and all benefits should be universally paid and not means tested.
The State pension should be enough so that the cold weather payment is simply not necessary.
But the cold weather payment is paid precisely because the State pension is not enough to live on, and our politicians since Margaret Thatcher, have allowed the State pension to whither away because the right wing dont believe in the State pension, the right wing only believe in private pensions.
Elegran I do wonder if in fact there are that many pensioners in Japan. When we were there our Japanese friends told us that ther was widespread abuse of the pensions system. Everyone has a personal seal and to claim the pension one needs only the seal. Hence it is possible to bury the dead but the seal lives on. A digression I know but it shows how reforms are needed in countries I've always assumed extremely efficient
Elegran, ""How will it be paid for because if the funding is not in place, any plan will not be viable and it won't work"""
We have had NI for decades. Or seriously, perhaps you didnt know ?
Oh, it's like trying to pin jelly to the wall! I think you've just learned a script, Ivanhoe, and can't think beyond that...
Or knitting a dog out of snow?
"Complacient Britain,I'm alright Jack" attitude.how rude are you to say that when people have the right to pass their own views,we have over the time GN has been on line signed many petitions for some more important causes than I care to mention,I am now bored with the same old same old and am off to find a thread which is of interest me. Trainspotting maybe ??
Knitting dogs out of snow, or that pinnit site!
I am quite serious here, don't worry. I do know (as you do not seem to) that pensions are ALWAYS paid for by the following generation, who are working and paying taxes and National Insurance. The whole system depends on there being enough paid work about for there to be taxes coming in so as to have money going out
There is not a brown envelope in a box at 11 Downing street with your name on it, holding everything you paid, ready to hand back to you. You do not get back the exact coins and pound notes that you paid in.
Those went out immediately to pay the older people who were receiving money at the same time as you were paying it in. Your father's generation got that. Your children's generation are the paying tax and NI for your pension.
What we get when we retire comes out of what the people currently working are paying as their contribution. If there are more people out of work or retired than there used to be, there will be less money collected as they will not be paying tax or NI so there will be less to hand out.
Also the elderly are living longer now (thanks to improvements in health and medical knowledge) so pensioners get it for longer. When the old age pension was started way back in , people did not live long after they retired. Even over the last 50 years (1960-2010) the average life span has increased by around 10 years for a man and 8 years for a woman.
That means that those who do pay tax may have to pay more in the future to support the larger numbers of those who do not - and everyone may have to retire later.
Very well put, Elegran.
Very well put!
But I don't think it will change his one track, stuck in groove record!
I missed this out - A retirement age, originally of 70 but later reduced to 65, was introduced in Britain under the 1908 Pensions Act, when average life expectancy was around 50.
To get it you had to be at least 70 and unable to work. As the average age of death was 50, you were lucky if you reached 70.
UK life expectancy estimates in 2013 at the age of 65 are 85.6 for women and 83 for men. That means that the average pension will be paid for about 20 years.
Interesting.
Elegran
I concur, very well said.
I'm turning off the laptop now. I need my brain to cool a little before bedtime.
Elegran
I think I will join you. Bashing your head against a brick wall does take it's toll.
all!
Ivanhoe you really are a one-off! You manage to be both rude and patronising!
I think you could be in line for an award..................
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