NO NATIONAL INSURANCE CREDITS - NO MONEY IN OLD AGE
You pay National Insurance when you are in work.
Your NI contributions are paid by your boss and by you.
It costs (2013-14) £700 a year to buy back NI credits, but does not give you a right to benefit if you fall out of work, as only class 3 stamp so only towards your state pension (rising from current 30 to 35 years NI contribution for those retiring after 2016).
If you do not claim benefit or contribute through your job into NI credits, for two tax years, you cannot claim contribution based benefit again in your lifetime.
Each job is kept separate for NI credit history, unlike your tax affairs.
Add on the reality of rules now meaning less than 10 years NI credits, no state pension, and there is the perfect storm for older workers now over 45, with no money in old age at all.
Those on benefit - unemployed or disabled related - get NI credits free (actually they are paying all the stealth taxes at a 90 per cent taxation rate, but that is rarely mentioned by those with anti-welfare rhetoric).
TORIES PLAN EARNINGS TAX
If the Tory change happens of an 'Earnings Tax', then the unemployed and disabled will get no NI credits and, just like the Flat Rate Pension from 2016, will mean the final death knell of the welfare state. Leaving people, as before 1945, with no money at all.
Even the Roman Emperors knew well enough to feed people every day, with free bread each morning. Peasants have throughout history been the engines of change.
Many people have only now woken up to the fact that jobs of less than 14 hours per week / earning less than £109 per week (2013-14) have not been paying NI from their employer and from themselves. So no rights to benefit if fall out of work and no state pension.
As the rise in employment is insecure low income self employment, part-time casual work, zero hour contracts and a legal minimum wage below a living wage, and that mainly in London, when the government is cutting housing benefit to workers unable to move from part-time to full-time jobs, then the loss of state pension to the wife at 60 is not helpful at all.
NATIONAL INSURANCE FUNDS STATE PENSIONS
A lot of right wing newspapers (especially articles published in the Daily Telegraph and Daily Mail), and even chartered accountants, have a belief that benefit and state pensions come from current Income Tax payers in work.
Bearing in mind only 26p in the pound comes from Income Tax to government.
And 75 per cent of personal taxation is gained by government, from all the stealth taxes that people all pay, in or out of work and however long we live.
Examples:
- Insurance premium tax,
- alcohol and cigarettes,
- VAT even on food in supermarkets or from vending machines -
- examples: your meal on aircraft, ship, train
- and such as yoghurt, desserts, crisps, savoury snacks,
- hot food take-aways, ice cream, soft drinks,
- confectionary, soft drinks and mineral water.
- VAT standard rated for meals for hospital staff and visitors, but not the patients.
- Noticed Kindle books charge VAT whereas print books do not.
- 20 per cent VAT on getting a builder for housing renovation and repair work.
NATIONAL INSURANCE IS NOT A TAX
National Insurance is not a tax, but a contribution at 12 per cent of your wage within your 20 per cent Income tax band.
By not being a tax, the NI contributions are not available for general expenditure by the government.
If government borrow from the NI fund's surplus, the loan is limited in its use and charged an interest fee.
NATIONAL INSURANCE AND PUBLIC SECTOR WORKS PENSION CONTRIBUTIONS ARE RING FENCED
The NI fund (according to Steve Webb MP, Minister for Pensions) is ring fenced.
The confusion may arise from state pensions and public sector works pensions being thought of together.
But even with public sector works pensions, they are a contribution based works pension and not all paid from general taxation to council or national government pensioners.
Many council pensions are well funded, so less liability to the taxpayer.
Despite what media tell you, the average male council pension is £4000 a year and for women £2,800, as bulk of employees are low waged frontline staff.
Only politicians' works pensions has one of the biggest burdens on current taxpayers, in contributions and payout.
The NI Fund is kept in surplus and there has been no requirement to top up from general taxation for decades.
The NI Fund is kept at surplus to have at least 'cash in hand' equivalent of eight weeks expenditure.
AS NATIONAL INSURANCE FUNDS STATE PENSION NO EFFECT BY SCOTLAND'S INDEPENDENCE ON ENGLAND OR SCOTLAND PENSIONERS
This is shown by the Department of Works and Pensions recently confirming that if Scotland becomes independent after 18 September Referendum in Scotland, this has no effect on future and current state pension payout.
Whether a Free Scotland will payout state pensions at 60 to women and men remains to be seen?
UK STATE PENSION AMONGST LOWEST IN DEVELOPED WORLD
The UK state pension is one of the lowest in the developed world, on a par at fourth to the bottom, alongside Mexico, out of 42 countries, when looked at as a percentage of average wages (in UK around £26,000-£31,000).
The UK is in breach of international treaty law under the Social Charter, informs the Council of Europe and the state pension should be £138 per week, and this sum is under review as investigation does not factor in welfare reform and the bedroom tax. The Coalition government has ignored this and kept the state pension at its low rate, and from 2016 many new claimants will get loss not more.
In Scotland, the Free Scotland Yes Campaign say they will invest oil revenue as they do in Norway in a sovereign oil wealth fund, from which protected annual income from the investments Norway funds its state pension. The UK never invested their oil revenue, but just spent it.
So Scotland will have its own share of the ring fenced NI fund.
Source:
Scotland's Yes Campaign and subsequent comments by other finance boffins, in reply to Gordon Brown's speech at Glasgow University trying to scare Scottish voters into thinking they will lose their state pension if vote Yes on 18 September for a Free Scotland.
The same Gordon Brown as prime minister who ruined the works final salary pension for by taxing the pension providers.
Today, the Coalition want to tax private pension providers, taking around £35 billion from the investments.
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