Categorized | matt's blog

The great National insurance swindle of 1948.

National insurance, national insurance, national insurance.

Keep saying it to yourself and eventually you begin to ask, what is it and where did it come from? According to the government’s own website:-

You pay national insurance contributions to build up your entitlement to certain state benefits, including the State Pension.

Fair enough, what if I don’t want them?

As I understand it, and I am not a benefits adviser, you don’t get a higher pension or more in jobseekers allowance, if you have paid more in national insurance. So how is it an insurance scheme and what I am insured against? For example, if you take out life insurance policy and pay a monthly premium, you get a higher pay-out (if you die) dependent upon the amount of monthly premium you pay. If you like, you are betting you will die before the cessation date and the insurance company are betting you won’t. With national insurance, you pay a monthly amount into a scheme and you are insured against ……. going to work.

This is not what was originally intended by the Act of 1911. Back then, your employer would pay a stamp for your national insurance and keep a card with those stamps on. If you lost your job, or couldn’t work, they would give you your card with the stamps affixed. Hence the terms “paying your stamp” and “given your cards” was part of the language.  You could use the card to claim benefits and they were also often used as proof of employment.

This is no longer the case. Since Attlee changed everything over to the Welfare state in 1948, national insurance has become the stealth bomber of taxes. Ask anyone what the tax rate is and I am certain they will know it is 20% for a basic rate tax payer. Ask them what their personal allowances are and most people can have a good guess at around the £9,000 figure.

So, what are the employees rates for national insurance and how much does your employer pay as a percentage?  Not easy to remember is it.

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