ayshfm1 wrote: Moreover it's nonsensical to believe that abolishing NI changes the requirement to raise revenue,
Government never needs to raise revenue. That is an obsolete concept. If the state pension is paid, and there are items to purchase with that pension, then that will cause VAT to arise that wouldn't have happened otherwise. The rest is then paid to staff etc, which attracts income tax, etc, and so on down the spending chain - like a stone bouncing across a pond.
Calculate that simple geometric series out and you'll find that paying the money causes *additional* tax to arise that matches it. Because that's how percentages work.
We pay for it by spending the money. That's what an independent currency they don't use anywhere else implies.
People have made a reasonable point, receipts from NI could finance pensions currently,
Receipts from NI end up shredded in the same accounting shredding activity as any other centrally collected tax. They are deleted from the accounts at the end of the day. NI takes a slightly more circuitous route, but is essentially dematerialised into a notional claim over the National Loans Fund with recourse to the Consolidated Fund like everything else subject to the Exchequer Sweep.
The State pension is paid every morning at 8:30am simply by HM Treasury ordering the Bank of England to account for it. The pensioner's bank account is then credited as a result of the cascade of bank accounting that sets off.
The receipt and spending arms never meet. They are entirely independent processes with separate operating procedures. To the extent that the Government Banking Service runs receipts via Barclays and spending via NatWest.
Financing is never a problem. It just happens as a function of the way the money system works. A bunch of accounting journals are then pointlessly applied to make it look like there is a notional fund paying something. It isn't. It's an accounting abstraction with no control function whatsoever.
The fundamental issue is whether there will be anything to buy with a pension once you draw it. And that depends not upon taxation rates but upon the level of physical investment this country is prepared to undertake in the meantime. From our current pathetic level of 18% of GDP it's likely the shelves will be empty and there won't be anything to buy.
It's the investment/consumption ratio we need to be concerned with if any of us wants to retire on a pension (public or private), not tax rates.
NeilW