NI - where is all the money going?
Discussion
National Insurance
If you look at how much employees AND enmployers NI is paid, I am surprised at how littel benefit seems to accrue (well, I am not REALLY surprised.
Low earner:
Looked at someone starting work at 17, on £9k and slowly increasing wages (at below inflation rate)to £40k to at age 65.
Total lifetime earnings: £1.244 million
total NI (both employees and employers): £229k (18% lifetime earnings)
this starts at £65/month and reaches £680/month at age 65
'average' earner
This worker starts at 17 on £12k pa and is making £53k /yr at 65.
Total lifetime earnings: £1.66 million
total NI (both employees and employers): £321k (19.3% lifetime earnings)
this starts at £124/month and reaches £870/month at age 65
'above average' earner
starts on a grad scheme at 21 on £28 kpa
Retires at 55 having reached £116k per annum
Total lifetime earnings : £2.84 million
total NI (both employees and employers): £492k (17.3% lifetime earnings)
this starts at £441/month and reaches £870/month at age 55
It would seem that the 'benefits' employers can get is stat sick pay & stat maternity pay repayments.
Employees get:
a state pension of £5k/year ish (£97 per week at the moment)
some possibility of paltry unemployment benefit
not much else.
Would I not be able to taek out adequate private cover for sickness, incapacity & unemployment cover AND a pension contribution at these levels?
If you look at how much employees AND enmployers NI is paid, I am surprised at how littel benefit seems to accrue (well, I am not REALLY surprised.
Low earner:
Looked at someone starting work at 17, on £9k and slowly increasing wages (at below inflation rate)to £40k to at age 65.
Total lifetime earnings: £1.244 million
total NI (both employees and employers): £229k (18% lifetime earnings)
this starts at £65/month and reaches £680/month at age 65
'average' earner
This worker starts at 17 on £12k pa and is making £53k /yr at 65.
Total lifetime earnings: £1.66 million
total NI (both employees and employers): £321k (19.3% lifetime earnings)
this starts at £124/month and reaches £870/month at age 65
'above average' earner
starts on a grad scheme at 21 on £28 kpa
Retires at 55 having reached £116k per annum
Total lifetime earnings : £2.84 million
total NI (both employees and employers): £492k (17.3% lifetime earnings)
this starts at £441/month and reaches £870/month at age 55
It would seem that the 'benefits' employers can get is stat sick pay & stat maternity pay repayments.
Employees get:
a state pension of £5k/year ish (£97 per week at the moment)
some possibility of paltry unemployment benefit
not much else.
Would I not be able to taek out adequate private cover for sickness, incapacity & unemployment cover AND a pension contribution at these levels?
stevejh said:
Of course NI doesn't just pay for benefits, it is just another tax that goes into the Government's coffers to be used for whatever they want or need to pay for whether it be war in Afghanistan, paying off the National Debt or paying for Tony Blair's pension.
This. It's not ring-fenced.Obviously.
But it started as social insurance, probably based on the 1884 model of Bismarck in Germany.
If it was actually used properly to buy insurance against illness, redudancy, etc there'd be more than enough to fund proper insurance with decent levels of unemploment cover and provide a better 'basic' pension.
Needs a complete overhaul.
But it started as social insurance, probably based on the 1884 model of Bismarck in Germany.
If it was actually used properly to buy insurance against illness, redudancy, etc there'd be more than enough to fund proper insurance with decent levels of unemploment cover and provide a better 'basic' pension.
Needs a complete overhaul.
It's a big ponzi scheme. If anyone ran such a thing in the private sector they'd be quite rightly locked up.
Also if any private pension trustee altered retirement dates and benefit calculation like Goron Brown did with the State Second Pension (formerly SERPS) then he too would be in gaol.
The whole thing is a fiddle and a disgrace.
Also if any private pension trustee altered retirement dates and benefit calculation like Goron Brown did with the State Second Pension (formerly SERPS) then he too would be in gaol.
The whole thing is a fiddle and a disgrace.
Funny that what we were taught at school were lies. In the early 80's, I was told by our teachers that the NI we pay was a 'safety blanket', for when we found ourselves temporarily out of work - or needed medical care. No mention of successive governments raiding the NI pot.....
(Not as bad as the Italian version, though - I was paying an eye watering 24% of gross income, and when my accountant laughed and told me that I probably wouldn't see a Cent back when I retire, I decided to move back to the UK..)
(Not as bad as the Italian version, though - I was paying an eye watering 24% of gross income, and when my accountant laughed and told me that I probably wouldn't see a Cent back when I retire, I decided to move back to the UK..)
chris watton said:
Funny that what we were taught at school were lies. In the early 80's, I was told by our teachers that the NI we pay was a 'safety blanket', for when we found ourselves temporarily out of work - or needed medical care. No mention of successive governments raiding the NI pot...
NI isn't any of those things, it is just an income tax.Effectively we have a lower rate of income tax of 20+11=31 percent and a higher rate of 40+1=41 percent. That's it.
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