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Compulsion by another name

Paul King makes a case for compulsion in the UK regarding pension provision. What he seems to forget is that we already have compulsion and loads of it.

Employees already pay broadly 11 per cent of their earnings toward the “UK compulsory scheme”. This is topped up by a further 12.8 per cent of their earnings, this time from their employers.

So every UK employee is – by the barrel of a gun, as the Government is in charge of the army and ultimately can use force if it wishes – compelled to see nearly 24 per cent of their salary go toward the “UK compulsory scheme”.

The fact that the scheme does not work is irrelevant. As a profession, we need to highlight the existing compulsion as explained above – why it acts as a disincentive for employers to hire employees and why said employees try every (legal) ruse to avoid paying their share of the “compulsory” contributions.

The name of the “compulsory” scheme? Basic state pension and the even bigger con, S2P. The name of these “compulsory” contributions? National Insurance. Before a sensible debate can occur over personal accounts/compulsion, etc, as a profession, we need to discuss this whopp-ing great big elephant in the corner.

The bottom line is that with about 24 per cent of their remuneration going to someone else rather than themselves (always a disaster, as individuals tend to know best how to spend and manage their own money), employers and employees cannot afford compulsion at any sensible level. There just ain’t enough money left at the bottom of the pay slip.

Nick Lincoln

Values to Vision

Financial Planning

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