Phoney NIC “giveaways” that penalise the poor

johnson derisk

Boris Johnson had better not sell me a reduction in my national insurance contributions as an incentive to the poor.

His jump the gun announcement ahead of the manifesto was made up as it went along with all the wrong numbers. But worse – much worse – is the intent of Johnson and his party to fool us into thinking this is an “incentive’ for the poor. The proposals won’t help the self-employed or the elderly

and it will benefit the likes of Tory membership card holding me, much more than the hard-working families that Johnson is sucking up to

So let’s not pretend that this is going to target those who need extra money in their purses. This is going to benefit the people who have the internet bank accounts and are prospering.

Here is the IFS’ Xu summing the proposed giveaway up

‘If the intention is to help the lowest-paid, raising the NICs threshold is an extremely blunt instrument. Less than 10% of the total gains from raising NICs thresholds accrue to the poorest fifth of working households. The government could target low-earning families much more effectively by raising in-work benefits, which would deliver far higher benefits to the lowest-paid for a fraction of the cost.’


Or pay them back their overpaid pension contributions

The fate of 1.7m pension savers who are currently paying 25% too much in pension contributions is being ignored.

If Boris Johnson really wanted to help those at the bottom end of the income scale , he would alleviate the burden of them having to pay 5 rather than 4 per cent minimum contribution levels to stay in a workplace pension.

Labour little better

And shamefully , it is not just the Conservatives who are ignoring the “net-pay pension  rip-off”.

Instead , Labour is pledging various pension commissions to look into matters. They will no doubt find, what this bog has telling them for four years, that the poor are getting a bad deal out of net- pay pensions and no-one cares.

The cost of sorting the net pay anomaly grows, no doubt by the time we get around to trying to do so, we will find that the backdated payment of the promised incentive has become a fiscal obstacle.

Each month that goes past means another month of those who can’t afford to- paying too much into their pensions and as time goes by, the likelihood of this being put on a proper footing grows less.

The Liberals have also toned down the tone of their pensions manifesto, abandoning reform of pension taxation altogether,

Since Conservatives -Labour and Liberals  all seem to be in pre-election giveaway mode, it is source of cross-party shame that this ludicrous situation is allowed to persist.



About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to Phoney NIC “giveaways” that penalise the poor

  1. You’re being too kind to the proposal Henry.

    If you assume that the Lower Earnings Limit and the Threshold for NI both increase by £500 over the current amount, then there are some depressing results.

    Take someone on £10,000 a year earnings. That’s below the level at which income tax affects them, so their only deduction is NI. That changes their net income from the current £9,835.84 to ££9,895.87. They gain £60.03 a year. So does someone on £50,000 a year.

    Someone on £50,000 a year is unlikely to claim Universal Credit though while someone on £10,000 is very likely to.

    That’s bad news here. Because their net earnings have increased. Net earnings are what are used to assess entitlement to benefits. That £60.03 increase will reduce their Universal Credit by £37.82.

    The end result is that Boris’s generous help to the poorest paid gives them £23.01 and gives the better off £60.03.

    Where does the real gain lie?

  2. Ros Altmann says:

    Henry you are so right about the Net Pay scandal. None of the parties has yet proposed ensuring the low paid get the tax relief they’re forced to pay themselves in a Net Pay scheme, which they would not have to pay in a Relief at Source scheme.

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