A guest article from Mike Fenwick.
Any fears over the State Pension are unfounded!
State pensions … instead of saying we paid in – so the UK should pay out, we need a different perspective – follow the money! Simple maths drawn from GERS show the truth.
Do you think that your State Pension is dependent on the UK Government? It isn’t!
Your State Pension is actually provided by everyone in Scotland who pay their National Insurance contributions. This year and every year it is money collected in Scotland that pays your pension!
Is that true? Here are the figures for the past 5 years.
2017-2018 – NI paid in Scotland – £10362m – State Pensions paid in Scotland – £7919m
So more than enough to pay all State Pensions in Scotland!
2018-2019 – NI paid in Scotland – £10643m – State Pensions paid in Scotland – £8154m
Again more than enough!
2019-2020 – NI paid in Scotland – £11211m – State Pensions paid in Scotland – £8313m
And again more than enough!
2020-2021 – NI paid in Scotland – £11016m – State Pensions paid in Scotland – £8501m
And yet again more than enough!
2021-2022 – NI paid in Scotland – £12243m – State Pensions paid in Scotland – £8715m
So more than enough to pay all State Pensions in Scotland !
In each of those years (and in past years) the National Insurance paid in Scotland has been sent to the UK Government. The UK Government then control what is paid as the State Pension. With independence that stops.
What the figures show – as fact – is that the amount raised through National Insurance contributions paid only within Scotland is greater than the amount needed to pay State Pensions in Scotland.
There are many pensioners in Scotland who voted NO because they were (and are) dependent on the State Pension. That was their fear, they were threatened with the loss of that income, and it was all unfounded.
Conclusion: I just hope that it is not just me, but many in the YES movement who will start to show the facts, and they are facts, to many of our pensioners who think that it is the UK who pay their pensions. It isn’t and never has been!
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The figures used have been taken from Government Expenditure and Revenue Scotland (GERS) 2021-2022 which is a National Statistics publication. It reports estimates of the revenue raised in Scotland and the cost of public services provided for Scotland. For those with questions or who wish more information, use this link:
https://www.gov.scot/publications/government-expenditure-revenue-scotland-gers-2021-22/
MY COMMENTS
This is a most important message to get out. The worry Better Together created over pensions cost us dear in 2014. We became defensive when we should have been on the attack. UK Pension provision when reviewed on an International basis results in probably the last thing the UK would want to talk or boast about.
I am, as always
YOURS FOR SCOTLAND
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Agreed it’s nice and simple. ‘Ins’ and ‘Outs’ with a balance.
I’d recommend putting it on the side of a bus, quoting GERS – Give England Resources, Scotland! – as source.
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Hypothecation or general taxation?
Most certainly not general taxation. If it were it would simply be called income tax.
But it isn’t called income tax, its called National Insurance.
Moreover, the amount of pension an individual gets is dependent on the number of qualifying years of income tax paid.
So yes Panda Paws I get exactly the point that you make about the government aggregating all taxes, levies and charges, but National Insurance is headlined specifically and the amount of state pension paid hypothecated to the years of NI paid.
Mike Fenwick’s headline in and out figures therefore strike a chord with most voters.
Anyway, based on the recent political noise from our better together masters the pension entitlement rate is going up to 68 with future increases to 70 after that.
Interesting trend as mortality is now going down. Indeed this winter there has been a 30% increase in what is described as unexpected. deaths. Maybe its all the cold houses killing off the older folks with no doubt a welcome saving in pension payout.
To die for one country is a fine and fitting thing. And Jock has always been up for that
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Willie, I think you’ve placed your comment in the wrong place … should be in response to PP (below).
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“National Insurance is headlined specifically and the amount of state pension paid hypothecated to the years of NI paid.”
Yes but if you look at my link below it doesn’t only cover pensions it also covers contribution based JSA and contribution based ESA plus bereavement support payment and maternity allowance. You’ve not accounted for those costs in your in-out calculation. I don’t know if those figures can be extracted but without them you’re leaving an goal goal for the unionists to attack.
I think there are better ways to let pensioners know their pensions are safe with indy.
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@duncanio – Sides of Busses!!! Love it!
Let it read: “Pensioners! Threats or Promises?”
This is a post I made elsewhere (slightly repetitive therefore):
In 2014, Better Together issued a threat to every pensioner in Scotland, vote Yes and lose your pension, even if that is your sole source of income. It is time the Yes movement removed that threat and protected our pensioners by “guaranteeing” their pensions will be paid. How?
In my earlier posts I used facts from GERS to show that the amount of National Insurance collected in Scotland was greater than the amount of State Pensions paid in Scotland, year after year.
Let’s use that fact and say that the “first call” on the National Insurance collected in Scotland will always be the payment of the State Pension to those living in Scotland. Always!
Keep it that simple! Guaranteed! “Pensioners! Threats or Promises?” Paint it on the side of as many buses as we can find!
Ah but, Mike is not that simple, national insurance pays for more than just pensions, and Scotland has a deficit according to GERS. That has been the response from many to the posts I have made – but that is all part of the wider economic issues that an independent Scotland needs to address. It is part of a much bigger debate.
You can choose to continue to live in a country that threatens pensioners that they will lose what may be their sole source of income, or an independent Scotland that will promise that will not happen – ever!
The Yes movement have a message to deliver, one that would allow pensioners to make their choice. Threats or Promises!
My hope? That if Yes would only begin to deliver that message – you just never know our politicians might also hear it!
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Yes pensions are just part of a bigger picture, the total ‘package’ you might say.
We’ll make our own decisions for the priorities that we wish and in line with the values we hold. So ‘butter’ rather than ‘guns’, socialised not privately supplied energy, minimum incomes not means-tested benefits, health care at the point of need not when its too late, free not feed education, pensioners not paupers, nurses not nukes and so on and so forth.
That’s the point of Independence.
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Much as I would agree with you that the pensioner demographic is the one that still needs to be won over to indy, there are flaws in the above argument that could be used to further undermine their confidence. NI is not a hypothecated tax, it might have been once but basically it is just pooled with other taxes and not set aside as a separate pot. Furthermore, even if it was hypothecated, NI doesn’t just cover pensions, it would also need to cover out of work, carers’ and disability benefits.
https://www.gov.uk/national-insurance/what-national-insurance-is-for
It think it would be better to state clearly that the state pension would be at least the same in an independent Scotland and when they ask how that would be afforded point out the numerous saving we would make when not contributing to rUK’s priorities for things that Scotland neither needed nor wanted and are often not even in Scotland. Also point to the tax gap whereby the rich in the UK aren’t paying their fair share of tax given the wealth they have and how that wealth has greatly increased since Covid.
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You mention hypothecation I would not go that far, but were I a politician who wanted to influence those who needed reassurance, I would say that the “first call” on the National Insurance contributions derived in Scotland will always be the payment of the State Pension to all who live in Scotland. Make it central to any manifesto and explicit. The funds are there to do that. How that affects the pool you refer to is part of the much larger economic factors we need to address.
Put more simply remove any fear factor for pensioners by guaranteeing the continued payment of the State Pension, and allow individuals to decide on their future and their country’s future openly and without fear. No civilised society, no matter the differences over the issues involved should, as an example, be scaring an 80 year old widow into deciding how to vote by threatening her sole source of income.
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“I would say that the “first call” on the National Insurance contributions derived in Scotland will always be the payment of the State Pension to all who live in Scotland.”
That’s not going to be very comforting to those who lose their job, are disabled/ill or carers is it. Pensions should be guaranteed absolutely but you are missing the point. NI contributions also cover other areas of social protection. What if the costs of the other things is higher than the NI reminder after pensions? Are you going to say tough?
“The funds are there to do that.”
NI is not only for pensions though (your NI record does affect how much you receive). How will you counter the Unionists when they say just that and that your in-out calculations are thus wrong? If you say well that’s covered by other taxes, they’ll just say that there is a deficit in them so e.g. disabled people shouldn’t vote for indy – you’ll just have changed the “feart to vote yes” cohort form one group to another (actually 3 groups).
“No civilised society, no matter the differences over the issues involved should, as an example, be scaring an 80 year old widow into deciding how to vote by threatening her sole source of income.”
Well I agree with you but the way to reassure pensioners that their pensions are safe is not to do a calculation that pretends NI is some ringfenced fund that only covers them. Because it’s not and that argument will give the Unionists are rod to batter us with.
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To panda paws …
This is an extract from a post above, and I would also highlight the post from duncanio which follows where the extract is taken from.
“Ah but, Mike is not that simple, national insurance pays for more than just pensions, and Scotland has a deficit according to GERS. That has been the response from many to the posts I have made – but that is all part of the wider economic issues that an independent Scotland needs to address. It is part of a much bigger debate.”
So in raising the issues you have you are far from alone. It’s keeping me busy.
Scotland regaining its independence involves fundamental change, but will everything else remain unchanged? Will we just adopt the systems, the policies and the methods of implementing those policies that the UK has used. It is what it is, and we should just accept it? I share duncanio’s perspective.
In making the suggestion that I have it has two inherent objectives: to safeguard our pensioners and to get ahead of the further threats that can be expected, those that in many ways you have outlined.
If you do this, Mike, then it allows them to threaten that. All threats, and to be 100% expected. We should not regard the UK as a benign neighbour. They – to their core – know they have everyting to lose, and will do everything in their power to avoid losing.
Simple example: I won’t call it independence day, but there will come an actual day when iScotland will not transfer NI contributions to HM Treasury. NI is a pay-as-you-go system, here is what I suggest might be the comment from a UK Government spokesperson:
” The Government understands that the Scottish Government intends to withhold all future National Insurance contributions collected in Scotland, and will retain these to be used, entirely selfishly, in Scotland.
“We see that as wholly confrontational, indeed as with all matters related to independence, they simply fail to understand the implications of their plans. State Pensions are operated on a “pay-as-you-go” basis, and clearly if you cease to pay, it has consequences, potentially severe consquences.
“The Government are now considering just what those consequences may have to be for pensioners in Scotland.” ENDS.
They don’t have to do anything, just issue the threat, and we are back in 2014 territory.
In many ways you and I, both of us, are too close to matters, it affects our perspectives, which is why I made reference to duncanio’s comments.
As the years pass after independence many things not only have to change, they will change. For me the issues of pensions, all aspects of social security, issues of inequality, of the economy of an independent Scotland are part of a much much bigger debate. I hope in time to introduce other ideas which, like this one, help create and play a part in such a debate.
At the absolute beating heart of what I am suggesting is that we start to learn EXACTLY what it is to be wholly independent, and not dependent on anything the UK may have established in the past. And perhaps this area of pensions is no bad place to start.
We could leave current pensioners to trust that the UK will look after them. Lt it be what it is, change nothing.
But after 3 centuries of hard evidence that we cannot trust them – would you??? May I leave with that one question.
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A good explanation of how pensions might work in and Independent Scotland is given in this article by Tim Rideout, also published on YfS last February 2022 (https://yoursforscotlandcom.wordpress.com/2022/02/13/well-can-we/).
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However what is important to highlight is that more Money goes South than comes back AND that the average lifespan in the South of England is much higher than in Scotland.
Even if you accept the “general” tax description that Panda Paws makes these two points still stand and we could therefore pay a higher pension to perhaps help extend/rebalance that lifespan deficit.
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Just had a quick search and apparently 79.3 vs 76.8 are the numbers.
That is 79.3 years average life expectancy in England vs 76.8 life expectancy in England.
Now I know that statistics are complicated.
An average is just that, an average, and it can be different from a mean. And then there is statistical spread and much more.
But sticking with the average and a pension retirement of 66, what does the difference between England and Scotland mean.
Well if you retire and thereafter die at 76.8 and 79.3 the state pays out 10. 8 years pension to Jock Tamson in Scotland and 13.3 years John Bull in England.
That’s a very substantial 2.5 year difference which when expressed as a percentage equates to over +23% being paid in pensions in England.
No doubt the exact figure will be well understood by the Westminster Government. But isn’t it amazing that nearly a quarter more is spent on pension provision in England than in Scotland.
Ah poor Jock, he always was a bit of a beggar.
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Reblogged this on Ramblings of a now 60+ Female.
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Typical of the contributors to YfS, there are some excellent points made here. The thing is, voters don’t do, or respond to complex, abstract-calculations on the doorstep, as ‘No’ realised only too well, in 2014 when their pension scare-story, a downright lie, obscured rational argumentation. Now there’s a-nut-to-crack.
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From post above – see duncanio’s reference to the sides of busses,
“Pensioners! Threats or Promises?”
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We need to go further. Never mind the fear factor, how about just how crap the uk pension is and what a Scottish pension could be. Time to up the ante.
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Ah al, I get your drift. Scotland is too poor and is dependant on English generosity.
I’ve just added up the GERS figures quoted by Panda Paws and they show that over the last six years Scotland has paid to London £13.873 billion more in NI than Scotland receives in pension. That unless my arithmetic is wrong tells me that Scotland is paying 33% more in than comes back in pensions.
Add on to this the fact that England’s average life expectancy is 79.3 years which is some 2.5 years more than Scotland and a quick calculation tells you that England gets something around 23% more in pension pay-out.
Now as a once software programmer I know that writing payroll software might be complicated, but writing software is quite a different thing from adding up the figures as Panda Paws has done.
On reflection, in my introductory words I should have added to your comments that the Scots are not just poor and dependent on English generosity as you suggest but are also too stupid.
But moving off National Insurance, you’ll be telling us you wrote a software programme for counting oil and gas contributions which I believe from previous Westminster advice was less than nothing because the oil was worth nothing.
Got it now Al.
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“I’ve just added up the GERS figures quoted by Panda Paws”
I didn’t quote the GERS figures because they are a travesty of established accounting conventions and are thus generally meaningless.
“but writing software is quite a different thing from adding up the figures as Panda Paws has done.”
I didn’t add up the figures so I don’t know why you’re attributing it to me. I argued that the argument being used is a fallacy and will come back to bite us. So far it’s an argument I’m losing.
I don’t know how many ways I can say NI is currently just added to general taxation and there is no separate NI “pot”. That entitlement to certain benefits IS dependent on NI contributions but there is no separate NI fund being drawn on and that NI covers more than pensions. An iScotland could certainly consider “creating” a pot and thus hypothecating the tax but it isn’t currently and developing arguments based on it being so, is not a good idea if you don’t want your argument torn to shreds by a unionist MSM.
And I don’t know who said Scotland is too poor and dependent on English generosity but that’s a complete lie and based on the voodoo economics of GERS. There are lies, damned lies and statistics is a cliché for a reason. Numbers can say whatever you want them to but that doesn’t mean the underlying rationale is sensible.
I hope I’ve been commenting here long enough for folk to realise I’m as pro indy as they come but if I can see the pitfalls in this argument of
NI in – NI out = pensions surplus
you’d better believe the opposition will and indeed so will every neutral observer. Look at how they attacked on sharing the pound and Salmond lost the first debate with Darling decisively; credibility the Yes campaign lost and I’d argue never regained.
It’s one thing to guarantee pensions in iScotland, it’s quite another to do it in a way that can be dismantled by anyone with a passing knowledge of accounting and how UK taxation is currently managed.
But hey, maybe I’m wrong. £350 million for the NHS on a bus worked even though it was complete and utter balderdash. The pro Brexit MSM didn’t bother interrogating the claim because it suited them so maybe the pro indy MSM will do the same – oh wait there isn’t one…
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useful information but the problem is NI payments go to HM Gov .
What if HM gov stopped paying pensions if we attempt a Dissolution? we can’t have folk without their payments or salaries if they are civil servants.
that’s why it’s crucial that the SG introduces AGFRR now do it has direct access to funds to meet these payments if they are temporarily withdrawn by the U.K. gov during the hiatus after a yes vote!
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More Unionists propaganda debunked. This is good news for me being retired, however it wouldn’t have stopped me going for independence and voting Yes, is not just for us, its for your children and grandchildren. Giving them the life chances that has been denied to us and our forefathers.
End this colonial nightmare, Dissolve the Union.
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So far off topic it is over the horizon but here goes. As an ex SNP member I feel the need to help them out at this difficult time. Whatever your sexual orientation enjoy yourselves with anyone of legal age who will have you and will consent. If none of those apply do not or you will be sent to a jail matching your biological sex at the time you offend. Now that we have got that sorted if you want me to sort out the war in Ukraine I will require a payment as cat food and Guinness is not cheap post Brexit.
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We can look at the accounts and balance sheets till the cows come home. It’s rather moot as soon as Scotland starts issuing its own currency. I’m no fan of Alan Greenspan, but he is spot on here…
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