The case for an Increased Pension

Our pension is provided by the National Insurance Fund (NIF) which is the accumulated funds of the National Insurance Scheme set up by the Beveridge Report after the Second World War.

The income of the NIF consists of compulsory contributions from employees, employers and the self-employed, plus interest on its investments. Since the·1990s the Fund was made up of 11 % of employees' wages and 12.8% from employers contributions and it has been growing with contributions actually outweighing ,payments. The Government Actuary estimates that the NIF surplus in 2007/08 was £46billion that will rise over the next five years to £115billion.

The portion of contributions that goes. towards meeting the cost of the NHS is top sliced and is never paid into the NIF Fund. This is because once money is paid into the NIF it may only be used for the payment of Pensions and Benefits or for the cost of administering those pensions.
The Fund exists in a real sense and is held separate from consolidated revenue. Contributions are not taxes because they are not directly available for general expenditure by Government.

It has been alleged that three Ministers have admitted that money has been diverted from the Fund instead of using it to increase State Pensions. It is stated that the Fund's surplus is being used to finance expenditure which is totally unrelated to the purposes for which the Fund was set up.

It is also alleged that the surplus used to be invested in Government Gilts but since 2006 it has been invested in a Call Notice Deposit Account with the Commissioners for the reduction of national debt. If the Government has been using the surplus in the NIF to fund other public expenditure from the Pension Fund, it would appear to be a very questionable procedure.
It may be seen as a justifiable virement by Government Ministers but pensioners on low incomes may consider it a misappropriation of funds.

Joe Harris, the NPC Secretary, says it would cost £600million to restore the link between earnings and pensions now and £9billion to pay everyone a pension of £114 per week. The money is clearly there and there is no reason why pensioners should subsidise Government expenditure at the expense of having a decent pension.

If these allegations are correct, then we will await the outcome of the NPC revelations with considerable interest.

Item by Ken Lacey of Weston Super Mare Senior Citizens Forum