It is time that pension provision changed drastically, contributions are your money resulting from years of hard labour and the associated wages and Employers contributions and should work equally as hard for your future security and not for the benefit of anyone else.
Yet the Exchequer, pension providers and even Employers treat it as their money to use as they will, invest where they want or just to sit idle earning nothing, which occurs with many defined contribution schemes, where the money is at you risk but their pleasure.
The State is the worst offender, they collect substantial National Insurance contributions for your work insurance and retirement, put it in the State spending pot and spend it as they get it so that is not there when you want it. If and when you get a return, it is treated as benefit to be shared with all and sundry, join the queue.
It does not go forth and multiply, give any return or guarantee that it will be there when wanted, certainly in any adequate amount to reflect the contributions made. It becomes part of the social idealistic charity in which those who do not bother to work and contribute get most and are better off.
Even if you pay extra in a private scheme, which now all are being forced to do, you have no guarantees, your Employer may spend the money and default, the State will tax your investment returns, will raise a levy against default, due to their lack of financial control and your provider will make excessive charges.
This doom and gloom is not a good reason not to save but a need to demand more from those precious savings, it is essential that each individual puts away an adequate amount during his working life to support him in retirement, that they should be self sufficient.
Unless you wish to live in poverty, misery and uncertainty, you must not rely on the State but fend for yourself, that does not mean that existing National Insurance should remain unchanged, those in work who make these contributions need to insist they return to their original purpose.
They were intended as a national insurance for those in work and contributed, as a protection against potential hard times due to unemployment, ill health and a pension contribution for retirement, to reflect the money paid into the scheme.
Such savings for the future have not been put aside for future benefit, but have been spent as they arise, often used for other purposes or even squandered, with the intended benefits severely reduced, discarded or paid to non- contributors. Unemployment benefit is restricted to a poverty level payable to all , and pensions are almost at the same position, with the proposed single tier system abolishing the last remnant of State second pension.
If this money had been put aside, protected and made to work as hard as its contributors, we would not be in the present sorry state, put away as a proper insurance and pension fund, properly managed and invested it would be worth in real spending terms many times its original value, besides funding employment and growth.
It is not too late to change, in fact present and projected increases in the retired population make it imperative that we do. With this population due to double or more in the next 40 years, contributions will need to follow suit or the State pension will disappear altogether, the most likely outcome as those in work will be unable afford the cost.
All the pension reviews have ruled this out as impossible, but although difficult, it could be achieved with the will and determination to do so and the rewards would be large for both the State and the individual, however it is urgent, the longer the delay the higher the cost, until it will become impossible.
National Insurance contributions need to return to basics, removed from Treasury control to an independent body to be used for pensions, unemployment payments and job creation; half the present income would be needed to fund basic pensions, which would need supplementing with the new contributory scheme to give a “living wage” pension.
It is time for a change in pension provision, the contributions being made in State and private schemes, including N,I are more than adequate to meet all elderly needs of income and care, they just need managing properly.
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