The State and Public Sector pensions cannot survive in their present form, the cost is too prohibitive, the solutions chosen are all short term and unrealistic and being revised every year. We must all work longer, pay more and live on less in retirement, not acceptable or possible.
· Where are the jobs? - the State and others are all cutting back; our youth and others face a bleak future and resent it, as seen by recent riots.
· Where is the money? – wages are being frozen, living costs are rising rapidly, sometimes unnecessarily and we are being told to tighten our belts, with the State making drastic spending cuts.
· Where are the pensions?- how can you live on less in retirement when the basic State pension is already below the poverty line and reliable schemes are being priced out of business.
· Where is the incentive - all in work pay NI contributions, which is no longer delivering, neither are other once reliable schemes and the new Nest scheme is based on a loss making history.
The need for drastic change appears obvious if you accept the questionable population projections for the next 30 to 50 years. The Powers that be accept them but do not appear to look at the resulting consequences.
New Schemes will only be found by being realistic, standing back, assessing the problem and looking for solutions that will work however impossible or unpalatable, within the obvious cost limitations.
When one studies it, the problem is not as bad as it first appears; there is a lot of money in pensions. They are over-contributed, Funds are under- valued and the money does not work hard enough and with the State not at all, as a result pensions are a drain and not an asset, which they could and should be.
We live in a “get rich quick” World where greed and speculation dominate, long term savings, particularly pensions over 40 years, like a delicate plant, cannot survive unless taken out of that atmosphere.
I have been studying the problem over several years and completed this week a computer spreadsheet study on pensions and now have to write it up in a readily understandable form, and convince others that changes would work, the hardest part.
It looks at replacing the State basic pension, the Nest and defined contribution schemes with the Universal Funded Defined Benefit Pension Scheme outlined in Blog 12, which will complement existing defined benefit schemes including Public Sector pensions, now the subject of strife and strikes.
The aim is to bring all schemes up to DB standards of good and secure pension provision whose benefit outcome is guaranteed and which gives value for money. State and Public Sector will transfer to fully funded schemes over a period of ten to twenty years with enhanced benefits and large State cost savings.
The transition to a funded scheme is feasible on a neutral cost basis by combining it with a contributory scheme and utilising all the advantages of the existing schemes and the fact that they are all, including the State, over-contributed and undervalued.
The result is a pension scheme or schemes fit for the 21st century, independent of the State and if necessary the large Financial Industries, which returns freedom of choice about retirement to the individual, security and knowledge of their retirement income at an affordable contribution savings level.
The models studied take the worst case population projections for the next 50 years, combined with the best aspects of present schemes and proposed changes. It takes and changes the new scheme, starting next year of 4% employee contribution (8% total) , which is matched by an equal NI rebate of 8%, aimed to double the basic proposed minimum of £140 pw, £7,280 pa, to give £14,500 per year or more, put forward as a comfortable retirement pension, which increases to match inflation at 2.5%.
This Utopia is possible and will be detailed in the next blog.
Savings Annuities Public Sector NHS Teachers Police Local Government Hutton State
No comments:
Post a Comment