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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To think the idea of NI contributions is a farce

78 replies

OneAmberFinch · 18/12/2024 17:25

Or: "No, you haven't paid in..."

Off the back of the WASPI whining issue, but a more general point about pension entitlements. I'm continually astounded in every thread that there are people who honestly believe the state pension is one that you "pay into". People go on about years of contributions and stamps as if it has any meaning at all. Why?

Firstly, it's a defined-benefit entitlement that you get regardless of how much you and your peers contributed - it's funded by today's taxpayers.

Secondly, you can get "stamps" for all sorts of things that don't bear any relation to "paying in", including literally being unemployed on JSA?!

Thirdly, if somehow you didn't bother doing any of that, you get that defined benefit anyway regardless of whether you even contributed, because pension credit will top you up to exactly the same amount!

I think it's a real problem that we use the language of contributions and paying in to describe what is effectively a bog-standard universal benefit. I've got a lot of respect for many older people in my life and I'm not begrudging the genuine contribution they did make to society and people around them. But what is the point of pretending that the state pension and NI system is tracking that? All that time, money and effort just to give people an incorrect and actively misleading impression?

AIBU to think we should scrap all this tracking and just be honest that it's a benefit?

OP posts:
TreesWelliesKnees · 18/12/2024 17:43

Maybe it's a way of trying to incentivise the nation to work?

It also isn't entirely correct that pension credit will automatically top you up - I think that would be means tested, wouldn't it? For example, I will stop work once I have my full number of years of contribution, but not before, because I don't think I'd be entitled to any top ups or other benefits due to having private pensions and savings. I'll keep working, because I want the security of the state pension later.

KneesUnder · 18/12/2024 17:46

Completely agree with you, op. It also hides a lot of the generational inequality, as people believe their pensions are being funded by their own NI payments.

Brro · 18/12/2024 17:47

I agree but we live in a world where many people have no idea about finances at all and just basically wing it until they retire. It’s easier for them to understand and feel valued.

PoissonOfTheChrist · 18/12/2024 17:48

Pension credit is means tested so no, people won't automatically get it (and it's a couple of pounds less than basic state pension) .

Original poster
OneAmberFinch · 18/12/2024 17:51

@TreesWelliesKnees Yes, you're correct on the pension credit I think - my point was more from the other lower direction, if you didn't bother to work at all you'd still end up with at least the state pension as your total income. Which means anyone whose sole income is the (full) state pension can't even think to themselves "thank goodness I worked 35 years so I could have this security". Because they'd have it anyway. Apologies for the confusion...

OP posts:
Original poster
OneAmberFinch · 18/12/2024 17:53

"A couple of pounds less" than state pension is basically the state pension! And when you take into account the extra cliff-edge benefits you get...

OP posts:
tillytoodles1 · 18/12/2024 17:53

KneesUnder · 18/12/2024 17:46

Completely agree with you, op. It also hides a lot of the generational inequality, as people believe their pensions are being funded by their own NI payments.

Maybe so, but when I was working I was paying towards older people's pensions. Also schools, NHS etc, so now it's the workers turn to pay.9

BibbityBobbityToo · 18/12/2024 17:54

There's no convincing pensioners that all their contributions were spent years ago and not put in their own personal pot.

Government should really rebrand it as 'Retirement Age Benefit' instead of 'New State Pension '.

As someone who used to process benefits years ago, I'm also amazed that we all assume the current generation of pensioners were hard working tax payers. An awful lot never worked a day or got themselves on to Incapacity Benefit for life to keep the Tories unemployment rates down in the 70's (esp the former ship building areas).

SleepToad · 18/12/2024 17:55

Have you actually seen how much a full pension is..£169.50 per week

As for who gets it and how much they get...well I've had a job since I was 7. Paid ni from 16 and had to give up work because of medical problems aged 55. So I paid ni for 39 years and don't get a full pension.

That's because I opted out and put that amount into a private pension. My personal pension pot is over £1/2 million so I won't get any help with the government pension.

I'm not even entitled to jsa or any benefits because I chose to pay lower level ni contributions.

I don't have a problem that I can't claim benefits, but it's a bit rich that I paid 39years worth of contributions and don't get a full pension when the criteria for younger people is 35 years!

Wellingtonspie · 18/12/2024 17:56

Yes this whole idea of well I paid in all my life so I deserve.

You didn’t pay for you, you paid for those before you what you contributed back then wouldn’t touch the sides today, which is why we keep having to pay in more and more why retirement age goes up and up.

A 7k house years ago just post war times is a 250k today.

We really need to drop the idea of I paid my way, you didn’t, you haven’t and in reality many will of never paid in more than they have taken out, when you take nhs care, education etc in to account.

Brro · 18/12/2024 17:58

SleepToad · 18/12/2024 17:55

Have you actually seen how much a full pension is..£169.50 per week

As for who gets it and how much they get...well I've had a job since I was 7. Paid ni from 16 and had to give up work because of medical problems aged 55. So I paid ni for 39 years and don't get a full pension.

That's because I opted out and put that amount into a private pension. My personal pension pot is over £1/2 million so I won't get any help with the government pension.

I'm not even entitled to jsa or any benefits because I chose to pay lower level ni contributions.

I don't have a problem that I can't claim benefits, but it's a bit rich that I paid 39years worth of contributions and don't get a full pension when the criteria for younger people is 35 years!

You have got 1/2 million in a pension. It’s not the end of the world.

Frowningprovidence · 18/12/2024 18:05

I have some sympathy as, going back many years ago now, we did used to get letters from the government of the day. They were like an annual statement and talked about contributions and building up your stamps and much you'd built up.

People are only reflecting the language that was used to explain it to them back in current times.

Even if you know that there is no pot of money put by for you, it's still been sold as a social contract that you will get your turn.

Honeycrisp · 18/12/2024 18:05

I'd prefer we got rid of NI altogether and threw it in alongside income tax. What we have at the moment is both unfair and impractical. It's a tax only on people of a certain age, and certain types of income.

olderbutwiser · 18/12/2024 18:09

Agree it's ridiculous - bil who has mostly been out of the country for his working life so paid no ni but is British will get pretty much the same as fully paid up dh and me when the time comes. And ni comes nowhere near paying for the nhs. Just add it to income tax and be done.

Gem359 · 18/12/2024 18:10

It's not the people paying NI's fault that governments spend all the money and don't invest any of it for the future though is it. Your anger is misplaced.

Original poster
OneAmberFinch · 18/12/2024 18:10

Honeycrisp · 18/12/2024 18:05

I'd prefer we got rid of NI altogether and threw it in alongside income tax. What we have at the moment is both unfair and impractical. It's a tax only on people of a certain age, and certain types of income.

100% agree.

OP posts:
dynamiccactus · 18/12/2024 18:11

Also agree they should add it to income tax. Treat us as adults - we do realise that we are paying tax and NI, so if it all becomes tax, we will understand that the % payment increases from say 20% to 32% or whatever!

Honeycrisp · 18/12/2024 18:13

It's also just not a good idea to have a tax that falls so disproportionately on productive labour. Not in a society with our demographics and productivity.

Username056 · 18/12/2024 18:16

I agree with you in relation to the state pension. Make contributions for 35 years and someone who has only paid 10 years will receive pretty much the same (hope to be corrected if this is wrong). And once you qualify for pension credit it’s a gateway to other benefits that will make you better off than the person who has made 35 years of contributions (and does not have a separate additional pension) eg WFA, Free glasses and dental care.

Houseplanter · 18/12/2024 18:18

Well I completely understand that the current workers are the ones paying the old age pension, but it wouldn't stop me thinking I'd bloody earned my turn when the time comes.

Yes I've worked 40 years non stop and paid everything I've been asked to. So I do feel entitled to it.

Those who haven't contributed to society, having just taken from it for years? No they haven't done the same as me.

AuntyEntropy · 18/12/2024 18:20

dynamiccactus · 18/12/2024 18:11

Also agree they should add it to income tax. Treat us as adults - we do realise that we are paying tax and NI, so if it all becomes tax, we will understand that the % payment increases from say 20% to 32% or whatever!

Of course we're not all paying NI. Older people don't pay it, however much they earn. Jeremy Corbyn and Nigel Farage get the same salary as MPs, but one pays nearly four grand more in tax on that salary than the other.

You don't pay it if you're living on investment income either.

So yes, I agree, bundle it all in as a single tax. If you're lucky enough to be earning a chunky wage at age 68, or to be living on investment income then why shouldn't you pay NI on that?

bellocchild · 18/12/2024 18:29

We were really hard up, so we went for the Married Woman's much-reduced contribution. Many years later, I found I couldn't make up the contributions, even though I could afford it then. I made my contributions up via a combination of methods - deferred retirement, buying back so missing years - but it is still annoying. I feel sorry for the WASPI women.

kitchenhelprequired · 18/12/2024 18:31

@SleepToad part of that half million private pension is the SERPS from contracting out- you wouldn't have that amount if you hadn't opted out.

I agree that you made a decision based on the facts at the time but you are actually better off than some - some of us didn't contract out, the SERPS scheme got scraped and the only benefit is lowering the number of years required for a full pension without the ability to stop paying contributions if still working beyond the years required which most people will be. At least your money went into your private scheme.

WTFMartin · 18/12/2024 18:48

Is it any different to people who now say they are entitled to claim x, y, z benefits because they’ve paid taxes for the last x years.
Many people assume that what they’ve paid in is earmarked for them to take back out when needed.

ILikeItWhatIsIt · 18/12/2024 19:05

I'm assuming then that all the whining millennials on this thread wouldn't mind if they were told the state pension was being scrapped and they won't get anything, after paying tax and NI for 40 years. I mean, you haven't paid in after all.