Personal welfare accounts should replace National Insurance and means testing the state pension will restore fairness to Social Security says Civitas, the Institute for the Study of Civil Society.

These personal welfare accounts proposed by Civitas' professorial research fellow Peter Saunders in Beyond Beveridge [1], would provide people with an income during periods of joblessness, parental leave, higher education and retirement, Civitas argues. This would help to reintroduce the contributory principal back into the social care system.

The system of National Insurance is no longer fit for purpose says Saunders.

Civitas also argues that saving into a private workplace pension should be compulsory and that the money raised from the sale of assets such as the Royal mail and banks should be used to top up taxpayers’ private pensions.

"A move to personal accounts would overcome many of the weaknesses and problems in the current NI system while strengthening the vital 'contributory principle' at its core. It would reduce pressure on the public finances as well as delivering an effective system of social security which is responsive to people's needs and widely regarded as fair by the public," Saunders writes.

Piggy Bank © The Economic Voice"Moving to a system of personal welfare accounts would give people more control over their own savings. It would be more efficient than having the government doing it for us, it would strengthen work and savings incentives, and it would promote a stronger sense of personal and civic responsibility."

He also says that "Means-testing the state pension, to target state benefits more precisely on those in need, is not only a sensible and desirable policy; it may be an unavoidable one."

At the end of the day the contributory principle has been eroded and the public's belief in the fairness of the system has 'ebbed away' says saunders. "This contributory principle is widely supported by the British public because it taps into an instinctive sense of fairness which we all share."


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