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DWP boss Mel Stride grilled over fears state pension could drop £300 if NI is scrapped

DWP boss Mel Stride has been asked if scrapping National Insurance could result in a drop in the state pension.

The Work and Pensions Secretary was asked by a Government committee today (May 22) if scrapping the tax would result in a £5 or £6 a week reduction in the state pension, which would amount to £260 or £312 a year.

Mr Mel Stride told the Work and Pensions Committee “these are hypothetical questions”, but he was pressed on the issue amid concerns binning the tax would result in a £46billion drop in Government revenues.

Chancellor Jeremy Hunt announced before Parliament the Government’s aspirations to eventually bin the levy earlier this year. A pensions analyst previously told Express.co.uk such a change could “dramatically change the pension landscape”.

Mr Stride told the committee: “The Chancellor and I, and other members of the Government, have an aspiration to abolish National Insurance through a determinate but long period of time.

“Decisions around how money is spent within Government are typically announced in the main at least, at fiscal events in the Spring and the Autumn.

“As you will know, they are underwritten in a scorecard by the OBR to check that all the numbers add up and are within the fiscal rules. That’s the way the system operates.”

Steven Cameron, pensions director at Aegon, spoke to Express.co.uk about the complexities that would be involved in scrapping NI.

He said: “While such a radical change may be seen as a simplification, the devil will be in the detail with many questions to answer.

“One key unknown is whether the ambition relates to employer NI as well as employee and self-employed NI contributions. And what would the consequences be for income tax rates.”

He also raised the question of the ‘NI fund’, which is mentioned in Government guidance saying that the fund goes towards state pension payments.

The analyst said: “The Government still reports on the ‘NI fund’, showing NI contributions received against state pension and other payments made year on year.

“So even if NI contributions are set separately from increases in the state pension, we need longer term clarity from whoever is in power on where the money for state pensions will come from.”

State pension payments increased 8.5 percent in April, with the full new state pension now paying £221.20 a week, while the full basic state pension is £169.50 a week.

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