BBC
Quote:
National Insurance is now used to pay for:- The NHS
- Unemployment benefit
- Sickness and disability allowances
- The state pension
NI is supposed to be "ring fenced" - meaning the money raised is only used for these areas and won't be spent on things like building schools or employing police officers.
However, the government can borrow from the National Insurance fund to help pay for other projects
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In 2008-09, the forecast NI revenue was £97.7 billion (source - IFS page Page 4, Table 1, which also states on page 11)
Quote:
National Insurance contributions (NICs) act like a tax on earnings, but their payment entitles individuals to certain (‘contributory’) social security benefits.
In practice, however, contributions paid and benefits received bear little relation to each other for any individual contributor, and the link has weakened over time. Some contributions (21% of the total in 2008–09) are allocated to the National Health Service; the remainder are paid into the National Insurance (NI) Fund and used to finance contributory benefits. The NI Fund is not a true fund in the sense that it has no significant balance available for investment: current contributions finance current benefits, and their notional separation from general government revenue is a largely meaningless accounting exercise.
Officially, the fund should not fall below one-sixth of NI expenditure, to ensure there is enough money available to pay benefits. Historically, this has been achieved through a grant from central taxation
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btw, the Government aren't dropping the State Pension - NEST is to supplement it.
btw2, 16% of the UK population are pensioners - that's approx. 10 million people; divide the quoted surplus of £12 billion between them, and that would about £20 a week each for a year, then it would be all gone.....