The Gray Monk

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December 03, 2005

Pension? What pension?

Lord Turner's report on the pensions crisis is finally published and, surprise, surprise, so much of it has been leaked already that it is almost a case of "what publishing date"? Equally, it does not seem to have so much that is radical about it - apart from a recommendation that every one should, by 2050, work until they are 68 or 69 before drawing their old age pensions. As by then I will be 110 I hardly think that this is going to have a radical impact upon me, but it will affect many of those currently entering the workforce.

One aspect that does seriously annoy me however, is the suggestion that every employee should in future have to pay a further 4% of income into a compulsory saving scheme "designed to provide them with a pension at retirement age". That is precisely what we are all already paying 12% of income in "national insurance" for! That "National Insurance" is supposed to fund the NHS, Pensions and that even greater economic "Black Hole" - the Social Welfare Blair and his cronies so love to proclaim as a "model" for everyone else.

The Turner Report proposes that everyone should contribute 4% of income, topped up by a further 3% paid by employers and 1% added from the Treasury. This is already done in National Insurance, since every employer pays an amount matching the employees contributuion into the NI fund. So, if we have 22 million workers all paying National Insurance, and let us assume that the mean average is £3,000 per person per annum (based on the Treasury's "average" National Income of £25,000 per annum) then the employers amount would be at least £3,000 per employee, making £6,000 per annum for each one of the 22 million employees. My calculator tells me that this means the Treasury is getting £132 million a year pouring into the Treasury's coffers. The real problem is that this is not enough to pay the NHS, bloated as it is with bureaucrats and Damagers who contribute nothing whatever to the delivery of medical treatment or care to the patients, indeed, it is they who create the waiting lists and whose cost has shut down wards, created a shortage of beds and is now closing hospitals. So, patently, the NHS cannot be funded from this sum.

Nor can the even more bloated "Benefit" industry run by the Department of Social Security and Pensions. Like the NHS a vast amount of money is spent on bureaucracy and paper shuffling intended to ensure that anyone classed as "rich" - ie: you own your own home or have a few pounds tucked away in savings of one sort or another - does not benefit from anything they have contributed too, while the layabouts and terminally dependent (and I am not counting Old Age Pensioners and the genuinely disabled among those) are kept in the manner to which they have been promoted by the likes of Blair and his henchmen. Ask only what the Chancellor means by "Means Testing" and you soon discover that the prudent and hardworking are excluded from almost everything they have paid for through their working lives, while Blair and Brown's feckless supporters milk it for everything they can get.

Even allowing for the fact that the amount I have used as a rough guestimate will have been considerably lower than that in the first years of it's inception, had it been invested, we would not have the present crisis. Instead it has always been treated by the tTreasury as simply another element of the overall "tax" income taken from hardworking people to fund the lifestyles to which our Bureaucrats have always been accustomed. In short its name is a total misnomer and it is simply a form of income tax which has nothing at all to do with paying our pensions, the NHS or the Social Security it is supposed to be funding. It cannot, it is not invested, it does not earn interest or generate income, it is simply money poured into the economic black hole that is Whitehall.

If Lord Turner's suggested 4+3+1% was invested in a Trust Fund that was Treasury proof, I might consider this a good idea. As it stands, if it is to be collected and administered by the Treasury, it is nothing more than another tax on incomes and should be rejected out of hand. It is the Treasury and its refusal to invest money for the future, and the politicians who see every pot of money coming into "their" hands as a cash cow to be squandered on whatever scheme is flavour of the Budget, who have created this disasterous situation, but you will notice that they have not been required to reduce their very lucrative and entirely non-contributory packages to provide "fair" and "affordable" pensions for anyone else!

This is a thorny issue to be sure, and it will not be resolved by politicians or their aparatchik civil servants unless they have the courage to grasp the very simple point that you cannot take £8 billion a year out of the incomes generated by invested pension contributions in the private sector and still expect them to pay their pensioners. You cannot take money from today's contributors to pay today's pensioners and still expect to be able to pay those whose contributions you have taken today and spent today, the pensions they have paid for tomorrow! If you or I tried this trick in a private venture we would very soon be enjoying Her Majesty's hospitality in one or other of the overcrowded jails our judges like to fill with middle class types who dare to defend themselves when attacked by Blair's yob voter constituency. Perhaps that is the solution, let's bring the government and the Treasury officials who are responsible for this state of affairs to court on charges of false representation, misfeasance and fraud, for that is precisely what it is - on a national scale! And we need to acknowledge that it is not just that crew, because this is the same situation which has arisen in Local Government pensions - particularly the Fire Service Pension scheme - and in many "private" schemes where the money has never been "invested" to provide income for payment of pensions, but has been used instead to fund road building, parks, gardens, schools and probably a few things that, if looked at critically, could be very dodgy indeed. Nor is it just this government or Party that is guilty of this, it is every political party who have subscribed to this and misused the money in this way. They are all guilty of misfeasance in respect of the way that they have managed the pension scheme they are supposed to have set up.

It is no good their complaining that people live longer, or that they retire too early, the real bottom line is that they have stolen the money - rather like that other great supporter of "New" Labour, Robert Maxwell - and spent it on things they felt would attract votes, now the pigeon has come home to roost the last thing any of them want is to have to acknowledge that it is they and they alone, who are responsible.

The only problem is that, as usual, it is the hardworking who will now have to work longer and pay more into a fund, which, if it is not set up in an entirely different way from the start will be in equally poor state long before Lord Turner's target date of 2050!

I predict that nothing will change except the retirement age - and that is likely to rise to 70 before long and perhaps even further to 75 - and those who have paid into these funds all their working lives will eventually find that they are not entitled to the benefits under the Chancellor's "Means Test" criteria, because these will be set to exclude anyone he considers "rich", that is anyone who owns anything, has any savings and pays tax!

Posted by The Gray Monk at December 3, 2005 08:03 PM

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Comments

Posted by: Daniel at December 4, 2005 11:31 AM