Well, yes, NI fund running out, disaster, no

Younger generations will receive a “derisory” state pension in retirement because the cash reserves that fund payouts to the elderly will run dry next year, a report will warn on Friday.

A think tank claims to have discovered a “serious flaw” in the national accounts that within 12 months will leave the Government short of money to pay pensioners.

As a result, the Treasury will be forced to raid income tax receipts to ensure old-age payouts continue, according to the influential Centre for Policy Studies.

He’s noticed that the national insurance find won’t cover the pensions bill. Quite true and long known. So, general revenues will be used to pay it. Also long known.

Meh.

9 comments on “Well, yes, NI fund running out, disaster, no

  1. He’s noticed that the national insurance find won’t cover the pensions bill. Quite true and long known. So, general revenues will be used to pay it. Also long known.

    I agree with the first bit. I am not sure I agree with the second bit. Because although it is true and long known, it is also true that everyone in charge of the system has known they won’t be in office when the bills come due. So they have not cared one way or the other.

    It is the pensioners who assume it will be paid out of general revenue. The government has been made up of people who know they will be collecting a special, ring fenced, inflation-linked pension while heading a think tank in the US or Europe while touring the world getting seven figure sums for banal speeches when the midden hits the windmill.

    I would assume the young today won’t get nothing, but it will be derisory in sum.

  2. One of the few politically wise things Aneurin Bevan ever said was “The secret of the National Insurance Fund is that there ain’t no fund”. If even a rather dim socialist could grasp the point, surely the Tel should manage it?

  3. Add the word ‘National’ to the list of words and phrases which negate the meaning of the following word, e.g.

    ‘Democratic’
    “The People’s”
    ‘Social’

  4. Didn’t Bevan argue that existing pensioners shouldn’t be paid out of the fund because of this problem? Or was that something put out by his supporters to cover the problem?

  5. Bloke with a Boat – “Didn’t Bevan argue that existing pensioners shouldn’t be paid out of the fund because of this problem? Or was that something put out by his supporters to cover the problem?”

    I would have assumed Bevan wanted a proper Soviet-style central solution with pensions being paid from the budget. Because what he was trying to do was destroy the British tradition of paying for these things through insurance. If you contribute to your pension, it is yours. It is also easy to vary the amount you get because those on higher wages makes higher contributions and hence get a larger pension.

    But if it is all funded centrally, everyone gets the same amount even though higher earners pay more tax, it is a gift from the Labour Party, not something someone has earned, and loyalists can be rewarded by increasing the amount come election time.

    It is a feature, not a bug.

  6. It was, even in 1945, supposed to be a fully-funded scheme, so everyone had to pay in for 20 years before they got anything out, allowing a fund to build up. That didn’t happen.

    “Political pressures meant that, at the outset, the Government decided to pay out the full retirement pension, before the 20 years had elapsed which were needed for the National Insurance Fund to mature. Benefits were paid out of contributions collected. As a result, rather than acting as a funded insurance scheme as Beveridge intended, NI operated on a ‘pay-as-you-go’ basis with the cost of current benefits being born by current contributions paid.”

    http://www.publications.parliament.uk/pa/cm199900/cmselect/cmsocsec/56/5605.htm#a11

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