The end is NI
So, it looks like National Insurance is set to go up following this week's Pre-Budget Report. One thing about National Insurance is that we only have to pay it until we reach State Pension Age. Mind you, what with State Pension Age increasing to 66, 67 and then 68 (and for women going from 60 to 65 first) I suppose we'd better hope we actually do reach it! It'd be terrible if it became like one of those irritating dreams where you almost get there only for it to move away from you again wouldn't it? Still, I guess that's something for younger people to worry about really; someone my age probably needn't fret too much on that score.
The good thing about National Insurance rates going up is that it's something that's likely to make salary sacrifice schemes all the more popular. In the run-up to auto-enrolment in 2012 that seems to me to present an enormous advantage to real pension schemes and Group Personal Pensions over the one-size-fits-all, no bells and whistles approach of the Government's Personal Accounts default scheme. I'd say a properly constructed workplace scheme utilising salary sacrifice in the high-NI future would have a hell of an edge and provide better pensions at lower costs than the Personal Accounts scheme could ever hope to do.
I was thinking about National Insurance and the moving goalpost of the State Pension Age when we were away on holiday in the Algarve a few weeks ago. I think I wrote those thoughts up as a BeeLine back then, but I also translated the idea into cartoon format too. There's a reproduction of that cartoon strip from my Pension Conversations series in Pensions Week magazine here for you to read if you like. It's called "Swings & Roundabouts":
27 November 2008
Pension Conversations is published weekly in Pensions Week
Source: HM Treasury; Pre-Budget Report 2008.
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