A lot of people see NI and taxes almost as a savings

Comment on BNP Policies : BNP Pensioners Policy by David.

A lot of people see NI and taxes almost as a savings account for their future, well some of that money is spent on us as soon as it’s collected, roads, NHS, wars, education, unemployment benefits etc…

You might not agree with where all the money goes (I know I certainly don’t), but to work from the principle I paid in X money so should get X money out when I’m retired is completely forgetting about the fact we all use services from day one, actually before we are born.

If you were born here you’ve received a full education that was paid by the money the government collects, used the NHS in the past, again that’s money collected by the government.

So to work on the principle “I’ve paid far more in than I’ll ever take out” is a very simplified way of looking at things!

I currently make a very good living (above the national average wage) and pay quite a bit in NI and taxes, but I think I’ve not paid in (won’t pay in) as much as I’ll eventually take out of the system if I live well past retirement age and haven’t saved money for the future.

Lets do some basic maths, these are not precise figures, just an idea of what a person might pay in through their life time and doesn’t include council tax (although you could argue this all goes to services) and other taxes (VAT for example) that are harder to say the average person pays X extra taxes. So the true contribution figures are going to be higher than my quick calculation.

For our example we’ll take someone who dies on their 85 birthday and has worked from the age of 18 to 65 years of age, with a couple of years off work (unemployment/disability…) so this person has worked 45 years of their life and being retired for 20 years of their life.

Median earnings of full-time male employees were £531 per week in April 2009, so lets take that as our weekly earnings figure.

In this persons life time they’ve earned ~£27,500 a year or £1,290,330 in their working life time.

Using this calculator:http://listentotaxman.com/

Yearly figures
Net wage: £20,898.65
Tax due: £4,205.00
National Insurance: £2,396.35

Lifetime figure
Net wage: £940,439.25
Tax due: £189,225
National Insurance: £107,835

These figures aren’t going to be 100% accurate, but they are good enough for a rough calculation.

So our example person has paid in £297,060 over their 85 years of life to pay for everything they ever benefited from (like a ‘free’ education).

Of those 85 years this person had paid in £3,495 per year (averaged over the 85 years).

So has the average 85 year old who has earned an average wage of £27,500 per year for 45 years used on average £3,495 of services etc…. a year or is there a massive over payment?

This money has to cover their education, health care, pension, roads, MP wages etc… doesn’t matter if this person doesn’t agree with how governments have spent the money paid in, that’s the nature of government spending.

So do we think our average person will ‘use’ £3,495 of services etc…. a year?

I honestly don’t know, my main point is we all pay in for all our working life and it might not be as much as we thought it was, £3,500 doesn’t sound a lot for everything that goes on in the country in a year.

The single persons state pension is currently £90.70 a week, or £4,716.4 a year or £94,328 over 20 years of retirement. £94K is a BIG chunk out of the just under £300K paid in.

I’d have to do a lot more research to go beyond these rough figures, still if a person lives for 85 years and earns the national average wage, the amount they pay in over a life time doesn’t add up to that much money when you consider what needs paying for.

I had an operation on my back earlier this year, was in hospital for almost a week, must have cost £20,000+ on the NHS to have the operation. Then there’s the after care, follow ups with my surgeon, X-rays, pain killers (still on morphine for pain), physiotherapy etc… it’s all costly stuff.

I suspect the average person who lives to a ripe old ages takes out more than they put in. I don’t have a problem with that, what irritates me is when people assume they’ve paid in far more than they’ve received.

David