John’s Blog No 96 – Pensions- Welfare Benefit

An increasing number of pensioners are becoming dependent on welfare, even the Government refers to State pensions as benefit, not an invested right from contributions made, mixed in with other benefits and the total cost for all pensioners exceeds the National Insurance income. If you retired twenty years ago, even with State pensions, you were relatively well off; if you also had a private pension you were laughing all the way to the Bank, with annuity rates at 16% your pension fund gave at least three times the income in real today’s cost terms. Over those years, the State pension has been steadily eroded by rising living costs, which have not been matched by pension increases up until last year. This was the first time that both the basic and second pension matched inflation at a high rate of 5.1%; it is likely to be the last, judging by the official reaction and the moves to use lower indices. It is now at the basic poverty level, in fact those who have not worked or saved are now better off, during both their working lives and retirement, than those who work contributing National Insurance, a nonsense state of affairs. The truth is that those in work cannot afford the cost of welfare and unfunded pensions and this is going to get worse with the retired population projected to double in the next 20 to 40 years. The system is unfair and unsustainable, without even the guarantee of a good return from NI contributions when you eventually retire. Welfare Benefit is a problem in all developed Countries, with the solution ranging from let them starve to over generous housing and payment benefits. The Victorians created workhouses, which were just that and to be avoided at all costs, whilst landowners created tied cottages and large Employers built villages complete with schools, shops and recreation for Employees to encourage work. Today conscience and the heart rule over the brain and common sense, we need to create a compromise between starvation and “better than work” situation. Present standards are based on what we expect when in work and fairly paid; good housing, ample food including the luxuries and all the musts of modern living, which Society cannot afford and also resented by those who do for those who do not contribute. Benefit should provide the most basic living, the minimum to survive, it should discriminate between those who worked diligently, paid taxes but have fallen on hard times, deserving good treatment and the new entrants which divide between young citizens and immigrants. Benefit should not be long term, replacing work but a short term expedient. Those incapable of work, like disabled or full time mothers should be treated differently on a longer term basis, as should students. Earned work insurance and pensions should be treated as a right and not a benefit, although the latter may be needed in borderline cases. There needs to be a clear distinction between these, which requires the National Insurance contributions to be separated from State accounts, i.e. the Exchequer, in an independent body or Trust, serving those that work, the borderline is fudged with increasing numbers being forced into benefit. Benefit should not be a right but a concession and the State should manage the economy to minimise the cost; not by short term and penny pinching economies, but by planned policies and budgets to ensure maximum use of assets, which includes labour. Any able bodied unemployment is a waste. To be continued in next blog.