So, further request, requirement or instruction that people ‘save’ in share-based funds cannot solve the pension problem. Shares are the problem, not the solution.
But the solution is readily available. And it happens to be extremely expedient for any politician with the will to use it. The biggest potential problem we have in our society is the lack of public spending on infrastructure. It is what people continually demand of politicians.
To date those same politicians have denied the population access to the very funds that can provide the resources the population wants, not just now but after retirement, because they’ve insisted people’s spare cash must go into shares.
If, however, politicians thought for a moment instead of following economic dogma, they’d let that cash be used for what the current generation wants. These are things of real worth, like schools, hospitals, sewers, transport systems and so on. Quite possibly, those who built them might benefit from them in their own retirement. It is equally possible that the next generation who use them might be willing to pay what is in effect a rent to do so, and so provide an economic return for the future.
It’s always been the case that long-term saving needed to be matched by long-term investment. If the government could create venture capital trusts at short notice to meet the needs of the dotcom boom, there’s no doubt that if it takes this problem seriously it could create a suitable investment vehicle for this purpose as well.
Nothing would restore confidence in pensions more than people seeing their cash paying for the new hospital they’ll use in old age. And we could at the same time see the back of the appalling burden of the Private Finance Initiative.
Social capital investment can provide just as much opportunity for the financial markets as the less desirable, and decidedly more fickle capital markets. All it needs is will power.
That Triumph of Will again.
So, workers save for their pension by buying bonds, the money invested in hospitals. Hospitals pay interest to pay off the bonds.
Hurrah. This is entirely and completely different from the current system whereby pensions funds buy bonds in PFI schemes.
No, no, it’s completely different in every manner.