Revealed: The £271 billion “rape” of the National Insurance Fund that deprived 50s women of their state pension

dsc_8416

Guy Opperman – the current pension minister who says it is too expensive to pay the 50s women.

CROSS POSTED ON BYLINE.COM

The fact that 50s women  were robbed of their pensions  by raising the pension age is undeniable. But the biggest argument against putting this right has been the cost – a fact perpetually used by the present pensions minister, Guy Oppenman, who quotes the £70 billion plus figure.

Recently I discovered that successive governments had taken a decision  NOT to top up the fund as originally proposed by William Beveridge when the welfare state was set up in 1948.

What I did not know was how much money was lost. Now thanks to an extraordinary paper prepared for the National Pensioners Convention by a social security expert Tony Lynes,and still on the web, I now know. And it is staggering. You can read it here.

The paper written 12 years ago by a man I personally knew as a fount of all knowledge on the benefit system  when I was social services correspondent on the Guardian. He sadly died, aged 85, in a car accident in 2014. There is an appreciation of him in The Guardian here.

His calculation from beyond the grave is that for every year that the government decided not to contribute to the fund it was deprived of £11.3 billion. As he says: “Restoring the supplement at its pre-1981 level would bring an extra £11.3 billion a year into the Fund, enough to meet the gross cost of a £109 per week basic pension.”

We now know that virtually no money was paid into the fund by the Treasury for around 24 years from 1990 to 2014. I calculate – and this will be a conservative estimate – because it doesn’t count the reduced contributions post 1981 – that an amazing £271 billion  yes billion  extra would have been in the fund.

This would pay  more than three times over the money due to the women – and even allowed higher  state pensions for everybody else now.

Why this didn’t happen is because politicians of all three major parties took a decision not to do this. They took the decision knowing that their Parliamentary and ministerial pension pot would mean they would be some of the wealthiest pensioners in the land when they came to retire. And the taxpayer would foot their bills.

They decided the pain should fall on the electorate instead. In 1995 they knew  all the arguments about people living longer and that money paid out in state pensions would go up.

They  could have changed the rules and informed the Government Actuary  Department that they would deliberately build up a surplus in the fund – so it could pay out as people lived longer without changing the pension age.

Instead they chose the cheapest  route – raise the pension age so they won’t have to subsidise the fund- but try and keep mum so the women wouldn’t realise what they were doing.

The villains are the late Lady Thatcher, John Moore, Kenneth Clarke, Sir John Major, Tony Blair, Gordon Brown, Steve Webb and Guy Opperman. There are many others who stood by and did nothing. That is why 50s women have been left in this situation today.

 

 

50s women injustice doubles site hits

The appalling injustice 3.9 million  50s women have had in facing up to seven years in not getting a pension is reflected in the doubling of hits I have had on my small site.

So far this year I have had more hits on the site than the whole of last year with  the top ten blogs all on the campaign for justice for the 50s women. The most popular blog with now over 28,000 hits is how angry 50s women deprived of a pension can boot out their MP. And the link to the House of Commons library on the  constituency breakdown of where the  50s women are has had over 4,200 hits.

The second most popular blog is The Downing Street state pension robbery with over 12,000 – which shows how the national insurance fund was underfunded and raided by successive governments of all political hues.

The rest of the blogs vary between over 2,600 and 7,600.

Thank you for all this interest and it shows how angry you are about the way successive governments have treated you.

Other blogs which have attracted  a lot of interest include Whitehall investigations into universal credit, the national citizen service and the continuing saga over the treatment of child sex abuser survivor Esther Baker.

 

The Downing Street state pension robbery

Downing Street thieves

I wonder if Mr Plod has a good sense of humour. It is a good photoshop. Pic Credit: Paul Downes @CallmeDownsie

CROSS POSTED ON BYLINE.COM

The mantra  that we cannot afford to pay the 3.9 million  50s women   their pensions until they are 65 and soon 66 is based on the premise that there is no money in the National Insurance Fund. The big question is why?

I have already in a previous report for #Backto60  shown that the accounts of the National Insurance Fund are in fact in surplus. But detractors point out that they soon won’t be if the government hands back £77 billion owed to the women.

But what if we have reached  this situation because the government has raided a fund  which is 91 per cent spent on pensions for other benefits. And what if the Treasury deliberately decided to  undermine the fund by avoiding paying any money into it?

This is what I have found out by investigating the history of this fund.

The original fund was set up in 1911 by Lloyd George and did not cover pensions – but helped pay  medical bills for wage earners and provided  unemployment benefit for  some workers. Employers and employees had to make compulsory contributions.

Pensions were introduced for those over 70  in 1908 and were means tested and supervised by local councillors. People could be disqualified from getting a pension if they had been imprisoned for ten years, weren’t of good character and were drunkards. The money came from general taxation. There is a House of Commons library report about the act here.

The real major changes came under the Attlee government which set up the welfare state. The National Insurance Act, 1946 introduced compulsory NI for all working people except married women. It set the pension age at 60 for women and 65 for men. Pensions, unemployment benefit, sickness benefit and a maternity allowance and death grant were paid out of it. There is a useful summary in the National Archives here. But it was run as a ” pay as you go ” scheme with money topped by the Treasury.

It is the attack on these provisions which began under the Thatcher government in the 1980s that has led to the 50s women losing out.

An excellent report by the House of Commons library describes what happened. It is worth quoting parts in full.

“In each year from 1948 to 1989, the National Insurance Fund received a grant from the
Treasury, known as the Treasury (or Consolidated Fund) Supplement. The origins of the
Supplement lay in the Beveridge Report, which envisaged a tripartite scheme of contributions to the Fund, whereby the Treasury would pay one third of the cost of unemployment benefits and one sixth of the cost of pensions and other benefits. In practice, the level of the Supplement tended to be around 18% of contribution income, a level at which it was fixed by the Social Security Act 1973.

“From 1980, the value of the Supplement began to decline, reflecting partly the growing level of contribution income and partly the constraining of spending on benefits by the abolition of earnings linking of the pension and other long-term benefits and earnings-related supplements to unemployment benefit. By 1988 the Fund’s contribution income exceeded its benefit expenditure, leading to a steady growth in the balance of the Fund (from £5.3bn in April 1986 to £10.4bn in April 1989 ).

In this context, the then Secretary of State for Social Security, John Moore, stated in 1989 that:

“The tripartite principle is already effectively a dead letter. The rationale behind it has
gone, and the Supplement has been shrinking steadily as a proportion of the Fund’s
income from about one-third in 1948. It now stands at only 5%. We consider that there
is now no need for it all. The £26bn of expenditure from the Fund is fully covered by
contributory income and the abolition of the Supplement will have absolutely no effect
on that expenditure”
“The Supplement was abolished by the Social Security Act 1989.”

It was a disaster – the fund which then  had  big surplus – went heading into the red – as it was now being raided for the full cost of unemployment and sickness benefit at a time of high unemployment.

So in 1993 the Major government had to partly retract by reintroducing a Treasury supplement because money in the fund had fallen by a staggering 50 per cent  due  to benefit pay outs as well as pensions. Pensioners were robbed.

But  the government fixed the rules so it was much less generous than the  system they bequeathed from Attlee. As the report says :

“There are a number of differences between the Treasury Grant and the Treasury
Supplement. First, the levels of Treasury Grant are set by reference to benefit expenditure rather than to contribution income. Second, and more significantly, whereas the Treasury Supplement was paid annually, irrespective of whether it was actually needed to finance a particular year’s expenditure, the Treasury Grant is paid at the discretion of the Secretary of State.

“The amount of Grant paid to the Fund was limited to a maximum of 20% of forecast
benefit expenditure in 1993-94, and to a maximum of 17% of forecast benefit expenditure in subsequent years.”

The truth of the matter is that the rules were skewed so the Treasury never had to pay out any money.  From 1989 to 2014 if the Treasury had returned to its original support  under  the Major, Blair and Brown governments, the Tory Liberal coalition and Cameron’s government, billions of pounds would be available now to help pay the 50s women. Instead as we know successive governments ruthlessly decided to solve the problem by raising the pension age.

In top of this the government also amended the benefits that would be paid out from the fund – including some new benefits like paternity benefit for example.

Anyone who believes the changes that happened – both the removal of Treasury contribution to the fund and the subsequent rise in the pension age – was a happy coincidence is deluding themselves. You can see here  in an article in the Daily Express what  George Osborne, the former chancellor, told investors at the Global Investment conference in 2013. Scroll down to the video

George-Osborne-speaking-at-the-conference-815768

George Osborne speaking at the 2013 Global Investment Conference

He said: “Tackling entitlement costs and the cost of an ageing society is a real challenge for Western democratic societies and in the UK we’ve brought forward the increase in pension age to 66 in this decade; we’ve brought forward the increase to 67 in the next decade and actually because of some reform taken some years ago the female pension age is increasing to 65 as we speak.”

“These changes, when you’re a finance minister, the savings dwarf almost everything else you do.

“They are absolutely enormous savings and they enable you to go on providing a decent retirement income. So you’re not necessarily reducing the entitlement of people who are retired you’re just increasing the age when that entitlement kicks in. ”

“Of course when these were first put into practice these pensions systems life expectations was dramatically less.

“I’ve found it one of the less controversial things we’ve done and probably saved more money than anything else we’ve done.”

Need I say more. The UK has one of the lowest and least generous state pension in the developed world and it has been bought about by making huge savings against 50s women.