New State Pension funding 'equilibrium'

mark55man

OK - so I was quite a lot out - I love this site

As you say - let's leave it to the experts, but it does suggest that pressure to move state pension age out is not required

What happens to the rest of the NI - what are the costs there?

Linton

mark88man said:

OK - so I was quite a lot out - I love this site

As you say - let's leave it to the experts, but it does suggest that pressure to move state pension age out is not required

What happens to the rest of the NI - what are the costs there?

The intention when the new SP scheme was brought in was to create a system that could be managed sustainably in the long term.  So I dont see any change until the rise to 68 happens if life expectancy continues to increase as expected.

As regards the rest of NI - In practice I think it's all just lumped in together with everything else.  However, there are certainly some benefits that logically form part of NI: Jobseekers Allowance, industrial disease/injury schemes, plus perhaps some of the NHS.

nigelbb

mark88man said:

OK - so I was quite a lot out - I love this site

As you say - let's leave it to the experts, but it does suggest that pressure to move state pension age out is not required

What happens to the rest of the NI - what are the costs there?

That has always been my opinion. A relatively small rise in NI could have kept state pension age at 65.

nigelbb

Linton said:

mark88man said:

OK - so I was quite a lot out - I love this site

As you say - let's leave it to the experts, but it does suggest that pressure to move state pension age out is not required

What happens to the rest of the NI - what are the costs there?

The intention when the new SP scheme was brought in was to create a system that could be managed sustainably in the long term.  So I dont see any change until the rise to 68 happens if life expectancy continues to increase as expected.

As regards the rest of NI - In practice I think it's all just lumped in together with everything else.  However, there are certainly some benefits that logically form part of NI: Jobseekers Allowance, industrial disease/injury schemes, plus perhaps some of the NHS.

National Insurance is that rare example of an hypothecated tax (TV licence is another) where the tax collected is earmarked for a particular use. The National Insurance Fund even publishes accounts. Normally receipts exceed outgoings but on occasion the Fund has required topping up out go general taxation. The way the Fund operates is one reason why any government proposals to reduce NI as a tax cutting measure are nonsense as any reduction in the tax take must be made up from other sources.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/839411/Great_Britain_National_Insurance_Fund_Account_-_2018_to_2019.pdf

JezR

National Insurance was raised in the 1980s, and benefits paid from the fund cut either directly (eg unemployment benefit used to be related to earnings rather than flat rate) or eroded (state pension revalorised on inflation rather than earnings) so as to eliminate the regular need for contributions to the NI Fund from general taxation, although this has needed to happen in times of recession. So in a way it has actually become more hypothecated. Gordon Brown clouded the issue by raising NI for the NHS and top slicing it before it got into the NIF rather than raising other taxes.
Reducing NI will only mean the money will have to be raised elsewhere, or borrowed, as state pensions are a fairly known and fixed  and ongoing liability, unless the Government decide to cut them too.

jamesd

mark88man said:

What happens to the rest of the NI - what are the costs there?

In 2018-19 £25.4 billion was taken and paid to the NHS as usual. £101 billion beyond that was paid into the national insurance fund and used to fund most working age benefits and the state pension.

Sometimes you'll see claims that the National Insurance Fund has  a big surplus that should be spent on something else. Operationally they want to keep around at least one sixth of annual benefit payments as a working balance. In 2018-19 this target was £17.1 billion and the achieved balance was £29.9 billion in March 2019, about 15 weeks of benefit payments.