Let’s be blunt: most people think of a pension as their retirement income paid for from a  pool of funds. That’s the appearance, i agree. But the substance is something quite different.

Pensions are a mechanism for transferring property rights: between generations and from the owners of capital to the suppliers of labour.

Umm, this looks bass akwards to me.

Now I agree, whether the pension is paid from a direct tax upon today\’s workers, or it\’s from bond income, interest on loans or that part of profits which are dividends, whatever is going to today\’s pensioners is coming from today\’s suppliers of labour.

But, as a pensioner you are in fact more akin to a rentier or owner of capital. Your pension is paid from the surplus of the current generation supplying labour.

So it is actually a transfer from the suppliers of labour to the owners of capital, no?

7 thoughts on “Eh?”

  1. It depends on what type of pension he is talking about. A ‘final salary’ pension comes from a pooled fund into which employers contribute from profits not distributed to shareholders, and workers either from lower salaries (non-contributory) or their wages (contributory). Thus, a final salary pension is classed as ‘salary deferment’. An employer-sponsored personal pension would be similar except that benefits are not defined, they are bought with the value of the fund.
    In both instances, were there no pension scheme in place, we could presume that salaries would be higher. What would we call that – ‘wage incidence’?

  2. It doesn’t depend at all on what type of pension he’s talking about – in terms of economic impact rather than legal and tax arcana, defined contribution, defined benefit, contributory and non-contributory, state and private are all the same: a proportion of current labour is taken by rentiers.

    Whether the mechanism by which my money is taken to pay retirees is direct taxation or greater share of national income to capital rather than labour isn’t really material to me – I still haven’t got it.

  3. I thought Peter Drucker framed it nicely in Post Capitalist Society–that pension funds had become Capital writ large and that workers now owned the means of production. What has transferred is the ownership of capital to the trustees of pension funds, no?

  4. It’s classic Murphy fuckwittery. He’s taken what, to the majority, must be a concern; the long term pension crisis (by whatever exact name one cares to give it) and mangled it.

    To give the bloke some credit (which is hard for me; I’ve met him and, in rela life, he even worse than on a computer screen) it is a unobjectionable topic to raise. The problem for Murphy, and one entirely of his own making, is that if, as he does, he writes so much shit for so long, he loses the right to expect anyone to take him seriously even when he writes about something which is a worthy topic to many, and not just his normal constituent of lefty retards.

  5. It depends: If it’s a private sector pension, it’s your return to capital.

    If it’s a public-sector pension, it’s extortion at gunpoint. This applies (you teachers, nurses and police officers out there) even if your employer has made some pretend deductions from your pay; these deductions are arbitrary and in no way reflect the cost of what you are receiving.

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