We outlined in the two previous blogs the basis for a new universal pension scheme, which if implemented would have major beneficial effects on the working and retired population and the UK as a whole. It would
· Guarantee all in work a pension proportional to contributions made with a minimum acceptable basic level and modest contributions
· Relate State expenditure to a fixed percentage of NI income aimed at 50%
· Allow flexible retirement before or at the present 65 level or beyond if preferred.
· Allow major annual investment Fund spend to promote Economic growth, Employment and prosperity
· Create Pension Funds large enough to give stability and security over the long saving period, with fund continuity through work and retirement
· Give all members a defined Pension pot, retained for the rest of their life
· Generate sufficient Fund surpluses to meet elderly care, social needs and quality of retirement
· Allow sufficient redistribution of pension wealth to guarantee the lower paid an adequate pension
· Clearly separate and define welfare for those incapable of work, as a responsibility of the State
This may sound a Pension Utopia but is readily possible with will, determination and strength of purpose, combined with vision and good management.
The money is already being saved and spent in pensions, it just needs organising and control to give maximum benefit and value for money. For example if the £55bn spent annually on the basic State pension was invested over 40 years at a modest 4% return it would yield a pension spend of £200bn per year, giving a BSP of £370 pw.
Unfortunately it is locked in the unfunded system distortion, paying today’s pensions for people who thought wrongly that their NI contributions were being saved for their own retirement and this continues ad nauseum.
It is time to break this viscous circle, treat contributions as personal savings, accrued for their benefit, with all the advantages this entails; the proposals outlined offer a cost neutral way of doing this.
It is not suggested that it will be easy or not involve political u-turns, particularly in Public Sector pensions, who require the same change; or not involve changes in investment attitude and practice.
The present Financial markets cannot meet the demands of long term saving of stability, fairness and guarantee, they are too involved in fast buck, quick profits and basic greed. Modest slow and steady growth gives adequate returns over 40 year plus with a modicum of risk and higher returns in the early years.
Our Victorian Ancestors showed determination, vision and long term investment, grasping opportunities, to leave us a legacy of infrastructure which has lasted 150 years and which we are struggling to repair or replace. We need to follow their example and rediscover their spirit.
Unfortunately we are stagnating, without firm or strong leadership, stumbling from pillar to post often with two steps back for each one forward, saturated with idealism with realism forgotten or ignored. Meanwhile the Far East have adopted the Victorian zeal and attitude and steadily leaving us behind.
Before we become the Commonwealth countries of China, we must stop the self flagellation of blame, woe and despondency and take common sense steps to ensure our future, whether it be an insular UK or a realistic and sensible part of the Global economy, where we recognise and accept our place and relative importance.
Pension reform offers the means to do this and secure our retirement and economic future.
Annuities, Public Sector, NHS, Teachers, Police, Local Government, Hutton, State Pensions, Transport, Comment
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