More details are emerging about the single tier pension proposals, with everyone extolling its virtues, the amount varying between £142 and £144 per week and qualifying weeks of service quoted at 35 possibly less with credits, making it available to more in work.
What is not being said, which is more significant is that this level is almost equal to the Pension Credit welfare benefit, currently at £142.70 per week and with other associated welfare benefits, still makes it larger than the new single tier pension.
Why bother to work and pay National Insurance contributions for a State single tier pension, which will leave you worse off than someone who has not. In any event if you do not qualify for the full State pension, you will still be dependent on this better welfare benefit.
Wives, husbands or partners will no longer be able to claim on their partners contributions and transfers at death will not occur. The State second pension and SERPS rebate both disappear, giving those in work a double whammy if they also contribute to a private pension.
What is worse, the second pension, which is related to extra contributions paid above the minimum, often doubling pension amounts, will no longer be paid. This is the last remnant of the contributory scheme, which now becomes a universal welfare benefit, with the more you pay in the less you get out.
It is effectively the death of the State pension, so why keep up the pretence of a pension scheme at all, probably because the alternative could be political suicide, when questions are raised about the purpose of National Insurance, why it is so high and increasing and not ring fenced for contributors?
Its intention was what its name implies and replaced the many insurance schemes taken out by workers to protect themselves from unemployment, poor health, inability to work and for a retirement future. However the money was never put aside, and became a general income to pay pensions and welfare, with it all being classified as benefit.
Of course it all comes down to economic costs, the inevitable redistribution of wealth and the overdependence on those in work, who in any case do not need such benefits and can afford to make their own arrangements. The fact that this is not true is blatantly ignored, welfare is being capped at the average wage of £500 per week, amidst complaints from those on it, who are unable to live on £600 or more.
Someone in work on the average wage has to pay tax and NI, travel costs, child care, pensions, mortgages and all the other extras associated with looking after a home and family in an independent and self sufficient way.
His own and the Employer’s NI contributions amount to 20% of his wage, in a good pension scheme this would have yielded up to a two thirds of a final salary pension, instead of the 28% of the single tier one.
The State expenditure on pensioners amounts to £108bn, almost all the NI income, but this should give over £10,000 per year for every one over 65, some £105bn, if you do the sums. Whilst those in work and fully paid up, now get the full State pension at £5,600. Where does the extra money go, it is not being saved.
If all were paid the single tier pension today the cost would be almost 30bn less than present spend, the savings aim of all of the budget deficit spending cuts misery in one fell swoop, alternatively the single tier pension could be set at £10,000 per year and still save money.
The whole thing does not make sense and the numbers do not add up, it all needs sorting out, are National Insurance payments for Pension contributions and work insurance or just a welfare tax and can we afford it. If it became a tax, the basic rate would be 40% for someone on average wage, with higher rate approaching 60%!
It is time State spending and work provision was overhauled on a logical basis, taking into account, who pays the bill and should therefore come first, what we can afford, with minimum welfare levels below minimum wage, directed at those unable to work. Why should we support migrant welfare chasers when Britons are starving but eager to work, and they or their parents have paid their dues to Society.
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