A contract you don't want

My thanks go to Lionel Shriver, writing in the November 2009 edition of 'Standpoint' magazine (well-written digest of current affairs, by the way) for this particular thought.

For nearly a century, UK citizens have been contributing every month to the National Insurance scheme introduced by David Lloyd George in 1911.  Since its inception, the National Insurance scheme has undergone many modifications, not least in terms of its apparently limitless capacity for contributions and its progressive transformation into a branch of the tax revenue system.

Many of us persist in the false notion that, via the medium of our NIC's we are in fact putting away money for our retirement.  At least, I deduce that this old wive's tale must have some residual credibility, judging from the UK population's apparent predisposition against adequate private retirement provision.  It is difficult to identify a form of belief which could be more misplaced than this one.  Indeed it seems as if the National Insurance scheme was purposely designed to keep UK citizens dependent upon the Nannie State.

In truth, the National Insurance scheme is more like a Madoff-type Ponzi scheme, where our money goes in, and someone else takes it out.  Furthermore, and perhaps most importantly, it is the basis of the contract which appalls, when one considers the logical ramifications.  Where else might you encounter a contract between two parties, where one of those parties decrees the level of contribution to be made by the other body, makes some kind of promise about the timing of benefits - and then changes its mind unilaterally after the contributor has piled in decades worth of contributions?

Of course, in our world - the world of private pensions, ISAs and the like - such a thing would be unheard of.  There would be an outpouring of righteous indignation on BBC's 'Watchdog'.  You'd expect some really vituperative articles in the Daily Mail. The FOS would sink under the weight of consumer complaints (now there's a thought).  In our world, nobody would take such an abuse lying down - they would complain and they would expect their complaints to be upheld.

But when it comes to the National Insurance system, when the 'other party' is the UK government, how can we, the consumers, enforce the contract?  Personally, I've concluded that the only practical solution is to ignore the State Pension, keep my head down, work hard and ensure that I am making adequate provision for my twilight years.