WASPI Women and the National Insurance Myth
The WASPI Women scandal represents and highlights the 'Big Myth' at the centre of British Politics: National Insurance.
Who are the WASPI Women?
The WASPI Women are the women who lost out on five years of retirement payments when the age of retirement for men and women was equalised.
This equalisation happened on the back of legislation that brought gender parity in many areas of life.
The debate on whether they should get compensation is still ongoing. However, like the rest of us, they have been caught out by a system that is clearly not fit for purpose and is branded incorrectly.
The BIG MYTH
The big myth that the Waspi women and most of the population live under is that National Insurance is a 'system' that we pay into. Sadly, it is just a tax for all intents and purposes.
National Insurance does not cover a significant proportion of the health and welfare bill the United Kingdom government spends.
WHAT IS NATIONAL INSURANCE
Since its inception in XXX National Insurance was supposed to pay for cradle-to-grave Welfare State. From the NHS to Pensions through to out-of-work and disability benefits.
National Insurance was meant to "pay-for-it-all".
The myth is so entrenched that people will say they have 'paid into the system' when there is no system.
There is no guaranteed entitlement linked to the payment of national insurance.
The government can and does change what we get from National Insurance at will. Retirement ages can go up or down (they never go down), of work benefits can change.
What the NHS provides can change, and has changed over the years.
That sad fact is that all of the National Insurance money ends up in the same pot as all the rest of the government taxation and it really is not enough money to pay for all the entitlements.
It is not even an 'Insurance product' it is (like Student Loans) a tax rebranded to make it palatable.
How to Fix National Insurance
There are some simple ways to fix national insurance.
Tell the Truth: Changing Public Perception
Tell the truth that the system is not working and needs reform. This of course is something that most politicians find very difficult to do, to tell the truth.
Codify National Insurance
Codify in law what it pays for and what it does not. Include all welfare spending in this figure
This means for instance setting the Pension rate at 37.5 hours of minimum wage per week. The amount of money as a percentage of all wages is set aside into a National Insurance pension fund.
National Agreement: Enshrine Entitlements for future generations
The New National Insurance would need a national agreement to ensure that it fits into what people want from the benefits system.
Investing National Insurance: Building a capital base
Approach it as an Insurance product and have money invested to build up a capital base to pay for the benefit entitlements, the investment should be from the surplus each age group pays into the system versus taken out.
All investments would have to be on a purely index basis to reduce costs and political interference, and as generations pay into the fund, and then pass on, the money they invested will live on in the fund.
For instance, each age group surplus would be invested into a capital
Government Spending: Towards Sustainability
The government fills in the funding gap from this fund each year until the system becomes self-sustaining. This will have some expense, however, as time progresses this will be reduced and eventually it will be cleared.
Each year group e.g. those born in 1980 would have their input into the system invested and then moving forward this capital base would pay towards all costs.
Make all people pay National Insurance including pensioners and those who receive income from dividends and capital gains, this will increase the tax revenue whilst not penalising working taxpayers and also making tax fairer as well.
A proportion of all estates should also be earmarked for payment into the National Insurance System at the same percentage National Insurance is of income from wages or profits.
Bringing these together with telling the truth could start to make the change National Insurance needs.
However, if the truth about National Insurance is not told, there is no way the system will ever be sustainable, fair or even an Insurance product.
The WASPI women, sadly, have been caught out by a multi-generational sleight of hand. This should prompt a change.
Sadly, I am not confident it will.