Labour and ‘Strengthening’ the Social Security Contributory Principle – John D Turner

This one is quite hard to get your head around – doesn’t it seem that benefit issues and National Insurance are needlessly complicated in order to confuse ordinary people? – but worth reading. John D Turner begins:

When Rachel Reeves talked earlier this year about extending the period for qualifying for Contribution Jobseeker’s Allowance, many (mostly genuinely concerned) knees jerked and the Daily Mail went into raptures. Every time this happens, I become more and more convinced that most of those reacting to such proposals know little or nothing about the reality of today’s Social Security system.

He then goes into the conditions required to qualify at the moment before commenting on Labour’s proposed change:

Labour is talking about extending the RTYs [relevant tax years] from two to five. And therein lies the rub. The number of people who currently meet the … conditions is steadily falling. Consequently, very few will be affected by this change and their numbers are dwindling any way. Many who would be affected will claim Income Based JSA instead (as they do now under the current rules).

As for the Daily Mail, well, if anyone is going to lose out from this change then it is their readers who are more than likely to have savings in excess of £16,000 so if they try to claim Income Based JSA they will be nilled out. They may continue to sign on (and be required to seek work etc) in order to receive NI Credits towards their State Pension. I lost track of how many in this group took umbrage at being expected to seek work. They were, after all, not benefiting from signing on. They got a bit testy when I pointed out (at today’s prices) they would either have to purchase Class 3 NI Credits, if they were not working or earn more than £153.00 per week (the current Primary Threshold) to obtain the equivalent benefit. Oh and they had to be available and actively seeking work just like everyone else signing on.

He concludes: I remain unconvinced that Rachel Reeves’ proposals in this area will strengthen the contributory principle in the minds of those of working age. It is a declining issue for many and, to my mind Labour, if it implemented this proposal would finally put it out of its misery and actually cause grief to the average Daily Mail reader, particularly those who think they will never need to claim Social Security.  However, Labour’s proposal will, if implemented, reduce the amount of JSA paid out each year and unemployment as measured by the JSA claimant count, but probably not as measured by the Labour Force Survey.

There is much more to this article. If the thought of dealing with the subject puts you into paroxysms of fear, then you are not alone – and you probably need to read it. There are implications for pensions and, in today’s UK, you need to know what’s going on with your pension.

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