NATIONAL insurance should be replaced by personal welfare accounts, while the state pension should be moved to a means-based system, according to a Westminster think tank.
A report by Civitas research fellow Peter Saunders says that the UK’s system of national insurance no longer resembles its original purpose, and that personal welfare savings modelled along the line of pension funds should be encouraged.
Saunders also suggests that means-testing the UK’s state pension may soon be necessary. “The UK government currently owes more than £5 trillion in pension obligations. Nearly all of this – £4.7 trillion – is unfunded,” he said.
Saunders added that since future workers were likely to lose out from the unfunded promises, people saving for a private pension should have their funds subsidised by proceeds from the privatisation of Royal Mail, and the eventual sale of the bank shares which the government owns.
“Current workers are going to have to foot the huge state pension bill in future years, even though they will forfeit the right to a universal state pension for themselves,” he added.