The Pensions Ponzi Scheme

morstar

Politicians of all pursuasions argue that net immigration and a high birth rate is important as we need more workers to fund/support the aging population...

Isn't this simply a pyramid scheme?

More and more people need to put in at the bottom to support those at the top of the pyramid.

I don't need to highlight where pyramid schemes fail to suggest that this is a bit wrong do I?

So what is the answer to the pensions problem and when are serious changes going to happen?

verylonglegs

I've think I've written about this before on here somewhere, that if a private company was running a scheme in such a way it would be considered a fraud but somehow it's acceptable for a government to do it.

Isn't the only answer a sovereign wealth fund based on long-term assets? Probably too late for the UK as we've sold everything and have spent the proceeds.

Serious change would only happen if it were the case that a politcians retirement were to be affected by the decisions they make. Cynical I know but I really doubt any of them care.

rhext

Like most complex social issues, there is no 'answer' to the pensions problem, there's a lot of different things that can be done to chip away at it.

You pre-suppose that promoting immigration and/or increased birth rate is intended to ensure more people are coming in at the bottom than are leaving at the top. But what if it's intended to help deal with the fact that there are less people coming in at the bottom than are leaving at the top....that more people are becoming pensioners than there are young people entering the labour market to support them?

Used alongside other obvious measures (like increasing the retirement age, decreasing benefits, raising tax revenues etc etc), I don't see why it can't contribute to resolving the issues that are undoubtably looming.

oldhairylegs

Reckon they will come up with some sort of means testing at some point in the future, so despite paying your NI for forty odd years, you won't get your pension if you happen to have saved up a few bob on the way - unless you were a politician......

sungod

it'll change when either...

the ones paying in realise what's going on and vote in a government brave enough to fix root causes (fat chance 1), or there's sustained mass uprising and/or revolution (fat chance 2)

on average...

it's not just the young paying, anyone born after the late 1940s will already have seen their pension/other income eroded (unless they enjoy one of the few remaining final salary or protected public sector ones)

the last generation, who partied through the '60s, are the ones who had the best ride - too young to really suffer from the war, old enough to ride the wave of increasing standard of living and retire at the peak, loaded up with plump pensions, and valuable assets (savings, investments driven by the boom and locked off before the crashes, nice homes, maybe a holiday villa/apartment in spain/portugal/miami/wherever)

everyone since is putting in a lot more than they will take out

increasing the young workforce only helps if the swing (starting in the 1990s) in income distribution to the 0.1% is reversed (fat chance 3), for >99% of us, relative income is stagnant/falling, investments/savings are way behind inflation, and standard of living falling very fast

unless that changes we will never have the large base of relatively well paid people needed to fund anything close to the current system - the majority will be born poorer, live poorer, and die poorer

on that gloomy note, i better do some work

rhext

sungod wrote:

it'll change when either...

the ones paying in realise what's going on and vote in a government brave enough to fix root causes (fat chance 1),...

But the root cause is that average life expectancy has gone up by, what, about 10 years since 'current' pension expectations were set. So what used to be a 5-year retirement has turned into a 15 year retirement.

It would be a brave government indeed that decided to fix that root cause.

Mikey23

the trend has been well known for many years. it is the western european disease. it will be very interesting whether this or any government will have the bottle to tackle it. im a baby boomer ... i hope the solution is not compulsory euthanesia

morstar

I have been slowly coming to the realisation that I won't be retiring at 66 as I'm currently supposed to. My mum and enjoyed a long and comfortable retirement and know damn well they have been lucky. They're really not sure why they get winter payments and all that malarkey though.

sungod

rhext wrote:

sungod wrote:

it'll change when either...

the ones paying in realise what's going on and vote in a government brave enough to fix root causes (fat chance 1),...

But the root cause is that average life expectancy has gone up by, what, about 10 years since 'current' pension expectations were set. So what used to be a 5-year retirement has turned into a 15 year retirement.

It would be a brave government indeed that decided to fix that root cause.

the root causes were greed, lust for power and selfishness, these resulted in (long term) failure to act to address the known change in life expectancy

if i were dictator the problem would be resolved :twisted:

pinno

Unlike Germany, Japan and the significant Scandinavian countries, we live in a high cost, low wage society. Unless that pyramid is re-orientated, we will never be in a high cost, high wage economy.

We want Scandinavian standards of health care/living. We want German standards of industry and organisation but we do not have the high wage, high investment ethos to support education, health care, pensions and structural investment. We are not prepared to pay for it as we all are being squeezed by a back door Victorianesque taxation system coupled with a low wage economy. Fuel duty (energy, diesel, petrol), VAT, Council Tax, TV License, Road Tax, Income tax, Ni Contributions etc etc. All favouring the well off.
The poor distribution of wealth in the UK borders on the obscene.