But it does not follow that pensions are the problem. On the contrary, state pensions are one of the defining achievements of the modern welfare state. Invented by Bismarck, of all people, they are a promise that old age will not mean destitution, dependency, or fear. And they were never meant to function only when the demography is convenient. They were meant to exist precisely because human lives do not run to the demands of Treasury spreadsheets.
The more important point to note is this. When the Financial Times implies that if we want to keep pension spending high then we have to raise taxes, it slips in an assumption that is almost never made explicit. It implies that the only way to manage pension spending is either to cut it or to increase the tax burden on those who work. It also implies, by omission, that wealth, and the huge unearned incomes it generates, are largely untouchable in this and any other debate on the contributions to be made by way of taxation to managing the finances of the state.
That is the real issue here. Pension reform has become code for telling ordinary people to work longer, accept less security, and shoulder more risk, while the owners of property and financial assets continue to accumulate returns with remarkably little obligation to the societies from which those returns are extracted, and yet it is not pensions that have undermined Europe’s capacity to cope with ageing. What has undermined it is chronic underinvestment, weak wage growth, and a housing system that facilitates rent extraction while the state refuses to act as a builder of productive and social capacity. If the economy cannot support its pensioners, it is not because pensioners exist. It is because too much of the economy has been structured to serve wealth rather than wellbeing.
If European states want pension systems that endure, the answer is not austerity by demography. It is to rebuild real economic capacity, and to tax income and gains from wealth, and even wealth itself, properly. That is not an extreme position. It is what a serious society would do.
So, taxes have to rise if we’re to continue with decent pensions then. OK. He’s spent a lot of effort there proving what he desires to deny really…..
The professorial poltroon pontificates again. “they were never meant to function only when the demography is convenient.”
Bring back Lloyd George’s original rules then: means-tested and restricted to people of good character over 70.
And what percentage of the population made it to 70, it must be quite low? The equivalent now must be getting of for 95 or even 100.
If you made it to age 10 then your life expectancy was around 55-60. probably the latter for women, the former for men. So the pension age only kicked in 10 years after the average women died, and 15 years after the average man. So yes it would equate to a pension age today of c. 95.
I’ll fix this part:
‘Pension reform has become code for telling ordinary people to work longer, accept less security, and shoulder more risk, while the Public sector workers, particularly those in jobs relating to DEI, LGBTQIA and Net Zero continue to accumulate returns with remarkably little obligation to the societies from which those returns are extracted.
Fixed that for him. It is without question public sector pensions and the person those pensioners supported, Gordon Brown, who caused the pensions apartheid. Nothing to do with his phantom plutocrats.
If European states want pension systems that endure, the answer is not austerity by demography. It is to rebuild real economic capacity, and to reform public sector pensions to reflect demographic reality and bring an end to inflation linked final salary schemes, especially within the European bureacracy
EU pensions will destroy civilization. However, this fool’s main regret is that he doesn’t have one, or indeed pension provision of any kind, hence his need at 70 to continually generate new money sources.
Public sector workers, particularly those in jobs relating to DEI, LGBTQIA and Net Zero continue to accumulate
Exactly! Typical civil service compensation has employer pension contributions of 29% TWENTYNINE PERCENT!!!! Those public sector workers winging about being on, eg, 30K are actually on FOURTY THOUSAND. link
… with remarkably little obligation to the societies from which those returns are extracted
Meanwhile, the British Establishment continues to import hundreds of thousands of third-world people every year. Tell me again about my ‘obligations’ to them.
… causing the thing he complains about, that “the owners of property and financial assets continue to accumulate returns with remarkably little obligation”.
Reverse the immigration-fuelled population rise, and property prices will drop back to sensible levels again, solving his problem.
We’re effectively broke and we seem to be at the limit for taxes. I don’t think state pensions will survive without serious reform. That’s going to be really painful but the alternative could be a complete collapse. So if people like Spud keep kicking the can and arguing against reform he’ll end up with no pension. Oh dear.
. . . one happy customer at a time.
The commie dick seems not to understand basic trade.
Dear oh, dear. Where does one start? The fool is so obsessed with money he cannot see the wood for the trees.
Pensioners are economically unproductive. That’s the definition of retirement. You’ve stopped. To stay alive they must consume some of the productivity of those still working. This is a foreseeable problem: we’ve got to the point at which most people can expect to live beyond their productive years, so we have to stash some spare output while we’re working to live off when we stop.
What is this spare output? Essentially it’s either stuff we’ve bought, that we then sell in exchange for the goods and services we need, or part-ownership of productive businesses (which are simply groups of productive people) that pay us money we can exchange for goods and services.
Key point: if the goods and services ain’t there to buy the money will do us no good.
So the problem is not really that too few people have saved properly for pensions, because what do those savings buy? The problem is that it’s impossible to know how much pension you’ll need because it’s impossible to know for how long you’ll live after you stop work, if you make it that far. Add this to rapidly extending life expectancy post-war and it’s easy to see that the “state pension crisis” is not financial but demographic.
So, that’s where the solution will be found, and it’s not in importing millions of net unproductive taxpayer beneficiaries. Sadly and annoyingly, it’s in pensioners becoming productive again, encouraged to do so by being allowed to keep their output, as the Scandis are now doing.
So what does Reeves do? Fucking hammer pensioners.
Pensioners are economically unproductive. That’s the definition of retirement. You’ve stopped. To stay alive they must consume some of the productivity of those still working. This is a foreseeable problem:
In the 80s economists used to warn about the demographic time-bomb when us boomers start retiring but politicians chose to put their fingers in their ears and sing tra-la-la-laa, I’m not listening,
I’ll go as far as to say that I’m sure Maggie used to bang on about it but was told to shut up, but I can’t find any evidence.
Stop fighting on the battleground of the lefts choosing by conflating the basic state pension with the nomenklatura pensions indulged in by ex state employees:
“The unreported annual cost of public sector pensions is £57bn – more than we spend on the police or the Ministry of Defence – according to a new report from the Institute of Economic Affairs.
Authored by IEA Chairman Neil Record, it reveals government has been running two “books of accounts,” leading to a general misunderstanding of pension costs in the public sector.
Because Members of Parliament, the general public and public sector workers are only told the discretionary cost, which is based on an arbitrary assumption about investment returns (i.e. a discretionary interest rate), not any market rate, they are in the dark on the true cost to the taxpayer.
The government declares the true cost, calculated according to the international standard for pension funds, only deep in its pensions accounts (as required by regulation). This makes the position understandable only by experts.”
https://iea.org.uk/media/public-sector-pensions-cost-57bn-per-year-more-than-is-declared-finds-new-iea-research/
A majir problem in any debate about “state pensions” is that it is fought on an intellectual field staked out by the left.
State pensions as a term has been (deliberately?) conflated to cover both the the basic state pension and the nomenklatura pensions taken by ex state employees.
This leads to commentators saying we need to cut the state pension.
This then leads to everyone who has not got sufficient private pension provision to automatically reacting against.
Politics being the art of the possible.
As the nomenklatura pensions amount to a larger future sum that the basic state pension, and are awarded to a privikeged minority, we need to look at those first.
Maybe a nomenklatura pension shoukd onky pay out what was actually put in plus average return instead of the ridicukously generous returns and assumptions now.
Example: a teachers pension after 30 yrs retiring at 57 woukd cost £2-3 miĺlion if purchased from the Pru., not sure how 15% of career average salary for 30 yrs gets to that.
Maybs we should set a maximum pension that can be paid out of taxpayer contributions – limit it to a max of 2 1/2 times basic state, to include everyone from SurQueer to ex coppers, to drs & nurses & teachers?
The Wah Anychess is as bad:
“The unreported annual cost of public sector pensions is £57bn – more than we spend on the police or the Ministry of Defence – according to a new report from the Institute of Economic Affairs.
Authored by IEA Chairman Neil Record, it reveals government has been running two “books of accounts,” leading to a general misunderstanding of pension costs in the public sector.
Because Members of Parliament, the general public and public sector workers are only told the discretionary cost, which is based on an arbitrary assumption about investment returns (i.e. a discretionary interest rate), not any market rate, they are in the dark on the true cost to the taxpayer.
The government declares the true cost, calculated according to the international standard for pension funds, only deep in its pensions accounts (as required by regulation). This makes the position understandable only by experts.”
https://iea.org.uk/media/public-sector-pensions-cost-57bn-per-year-more-than-is-declared-finds-new-iea-research/
In summary, this text argues:
Swing and a miss.
Bismark did not even imagine that demography could change so Murphy’s claim just avoids outright lying but is disingenuous. Bismark allotted pensions to those he deemed to old to work – on the lines of mediaeval almshouses for godly widows who were unable to earn enough to support themselves.
I haven’t read an FT article that says that we have to raise taxes to pay for pensions (although I can believe there has been one or more) but I cannot believe that the FT would demand an increase in taxes on earned income but complete exemption of pensions and investment income from tax increases.
Pension reforms have only been applied to the private sector because increased longevity means that a pension from the age of 70 (or any other fixed age) until death costs more so someone has to pay for it either by working longer or by being exceptionally lucky while taking more risk. Public sector pensions mostly (there have been some modest cuts) remain unreasonably generous [I once calculated that cost of a year’s pension accrual for a middle-aged nurse was 50% of her nominal salary].
I am actually quite puzzled by Murphy’s claim that Europe has a housing system that facilitates rent extraction: my very limited encounters with the UK private rental market have not included any instance of the landlord making a profit from rents (that may be because I have only been/known ethical landlords).
I am actually quite puzzled by Murphy’s claim that Europe has a housing system that facilitates rent extraction
If you let out a property, the payments are called rent. Therefore it’s rent extraction. Simples.