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Whatever Happened to our Twelve Billions? |
How Government pillaged the Pension Fund
During the later years in the working life of today's state retirement pensioners, the more perceptive noted a surplus rapidly accruing in the National Insurance Fund. No alarm was expressed; we had implicit faith in the Government as impartial administrators of what had become an obligatory superannuation fund.
Our contributions had clearly been set at a level which exceeded the amount needed to pay the pensioners at that time (thus refuting the argument of those asserting that the state pension is a pay-as-you-go scheme, today's contributors paying pensioner contemporaries). But we accepted those excess payments cheerfully, for the NIF surplus would guarantee our future pensions, OUR money securing OUR retirement.
By 1990/91 the surplus had reached a comforting £12 billions. But then what happened? The Government of the day, unable to resist the temptation of a pot of gold, intervened in the operation of OUR superannuation fund. First it diverted £15 billions over the next five years to incentives for personal pensions, a laudable objective perhaps, but only if at the same time it ensured no contributor from earlier years - whose money it was - would suffer. Next, anxious to be seen as the low-taxation party, it reduced contributions by three pounds a week.
Having thus spent our money in pursuit of its own political objectives, it had the gall to tell us it could not afford to index our pensions!
Later that same Government was to adopt a high moral tone when Robert Maxwell manipulated pension funds under his control. Indeed the recently enacted Pensions Bill contains provisions to prevent administrators from tampering with pension funds - but the Government, putting itself above the moral law, makes no amend for its own misdeeds!
There is of course a difference; despite the maladministration of the NIF, state pensioners in the UK and almost half the expatriates, including those in the USA and European Union, do receive a fully uprated pension, any shortfall resulting from the lower contribution and lost investment revenue being made up from taxes. ONLY expatriates in the Commonwealth are denied uprating.
Support Pensions Parity - or restore the Twelve Billions to the NIF! |
Note On 15th February 1999, 85 MPs supported a motion to raise the basic pension to £75 per week. In this motion they noted that the Government Actuary estimated that the balance of the National Insurance Fund at the end of the year 1999-2000 will be £5.9 billion more than the Actuary considers necessary; and urged that part of the unneeded surplus should be used to provide a genuine guaranteed minimum income for pensioners without a means test. A later motion, dated 17th November 1999, notes the Treasury's estimate that by April 2002 the National Insurance Fund's balance will be £8.43 billion above the minimum recommended by the Government Actuary. So the surplus is growing quite rapidly. Come to think of it, the annual growth in the surplus is £1.265 billion, which is nearly five times the annual cost of uprating all frozen pensioners. See "The cost of ending discrimination" Let's hope these billions do not go the same way as the 12 billion. |