Policy proposals indicate that we are rapidly approaching a situation where everything will be means tested, including State pensions, there is an overriding obsession or guilt with poverty, much of which is brought on by State policy and this needs to be brought back into perspective.
There is increasing envy of the rich and desire to take away benefits which they can afford themselves, but these are not the super rich who are affected, but the normal hard working prudent people, who pay their taxes and dues and manage their monetary affairs. They have paid for these services and benefits and are entitled to them.
Everything is now called benefit; originally tax allowances took account of the extra costs of raising a family, essential for creating the new working population we all depend on. These were abolished and replaced by child and other allowances paid for by the taxes and NI of those in work.
These in part led to the breakdown in marriage, leading to increasing State dependency, which blurred the boundary between earned benefit and welfare and has moved into old age, with State pensions becoming a welfare benefit for all; paying more to those who make no provision at all.
They are now being made to pay twice, through taxes and NI and then expected to make their own personal and family provision including contributory pension payments, if they also save and own their own house, the State look on these assets as available to pay for future services, such as care.
Poverty exists and needs welfare, but should be kept in hand and at an existence level. The new single tier pension of £140 pw, £7,280 per year is presumably at this level, if all over the age of 65 were paid this amount, then the present total pensioner costs of £108bn, including welfare would reduce to £90bn per year, or give all the 10.5 million a pension of £10,000 per year.
In fact the full basic pension is much less at £110 per week, £5,600 pa and many exist on half of this, hence the poverty in old age, the whole system is a mess. We should sort out what is the minimum living income for adults and children, decide if this is the poverty level and apply it to all as the maximum welfare benefit.
The living wage being discussed is at this level for part time workers on 20 hours pw but twice this for full time, giving a minimum level of pension from NI contributions and a comfortable level from additional contributions, both of these should be provided in a universal earned contribution scheme independent of the State.
Part of NI contributions should be repayed or rebated as contributions to the new scheme at the same rate and combined with the newly introduced contributory scheme of 8%, which would be some 40% of NI contributions from the average wage.
Although it would be difficult, due to the existing pension liability, it is economically possible for the State over a 20 year transition period and the savings and benefits would be extremely large to both State and individuals, once these occur the refund could increase to 50% to cover lower paid wealth redistribution and elderly care.
Current pensioner costs take up the whole of NI income and are projected to increase considerably with population changes, stabilising these down to half the income by fully utilising the savings advantages of a funded scheme would allow NI to return to its original purpose, supporting the unemployed, job creation etc.
The State could even afford to keep up contributions for unemployed members and it would also be more economic to make contributions for the permanent welfare population, it is all a question of using the money wisely.
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