PENSIONS
Updated May 28th 2006
28
NOV 2005
With the greatest respect, this is a
no-brainer.
The criteria for devising a national pension scheme are that it has to
affordable, fair but flexible and non-inflationary.
The following rules should deliver that.
1.
There should be no fixed national retirement age.
2. Certain occupations (e.g Airline Pilot, Train Driver etc where
members of the public have no choice as to whom they entrust their
life) should obviously have strict health criteria and an upper age
limit, internationally agreed in some cases, which can be revised every
10 or 20 years if there is a sound case for this.
3. Any particular profession can have a set retirement age if it can
be agreed with employees.
4. At the age of 65 and beyond, if old age renders an employee
unsuitable or incapable of performing the job, they can expect to be
'retired' totally or put into a less demanding position at a lower
wage, where there experience could be valuable.
5. Any individual should, with the exception of the above, retire
whenever they wish.
6. There should be a basic state pension
payable in cash or in kind or a combination to save people from
destitution.
7. The cumulative cost of this should be the same per head regardless
of retirement age. That means that anyone likely to, and intending to
live to be 100 should take careful thought before retiring at 60 about
how they will finance the next 40 years. They would have to either work
at a part time job, or have saved up, invested in a supplementary
pension or taken out an insurance policy to cover the situation. This
is because the non-means-tested state pension would cover, for example,
£5,000 pa. over 10 years or £2,500 pa. over 20 years etc.
8. The amount paid out monthly or weekly to the individual would be
assessed at the date of the first payment on the actuarial likelihood
of remaining life, to be revised each year.
9. The total amount set aside for payment could change in any budget as
seen appropriate but would not decrease.
10 The amounts specified here are only indicative. It could be much
higher without any risk to the economy and cost the nation much less
than it does now due to admin cost savings and appropriateness of
payments..
MARCH 18 2006
Globalisation
brings some strange effects. A bunch of old people stuck on the upper
floors in Scotland from Christmas till April while they wait for lift
parts from Italy. In France, a country run on logical bureaucratic
lines carefully drafted to ensure (up till now) adequate social
security at a significant but bearable cost by enforcing participation
through rigorous management, the strain has now resulted in an average
25% uneployment amongst the under 25's, and 50% amongst enthnic
minorities. Pensions, state funded or employment based, to which
individuals contribute during their lives, are nevertheless actually
dependent on wealth generated by those currently employed. This is
because the value of the invested funds depends on the overall state of
the economy and levels of employment at the time the benefits are paid.
The lesson is that even a country that tries to look after its own
economy by defensive means rather than facing global challenges with
openness, the downside comes in under the door and round the corner.
In
the UK, Gordon Brown has tried to accept the global challenge
competitively. But when it comes to pensions, he took options which
have turned out to be painful for some who did not expect to be the
cannon fodder.
The
Maxwell affair had brought about new legislation to remove company
pension funds from control by the management, and laid down some
minimum funding rules designed to ensure that in the event of a company
liquidating, the fund would survive and provide something near the
expected benefit. The Labour government then did 4 things that
destroyed the working of this. It removed tax relief on pension
contributions and then twice reduced the minimum funding level, and yet
it issued a government leaflet advising that company pension schemes
were a sensible means of provision for retirement, to be considered as
a prudent possible choice in the current financial environment
The
combination of these actions, not just any one of them alone, served to
encourage hundreds of thousands of people to rely on a process that the
government was actually undermining.
That is why more help than has
been offered should now be provided to those whose retirement pension
has disappeared. The PM says it would cost the taxpayer
£15 Billion. He
is misinformed. It would cost a tiny fraction of that a year, which
could be means tested above certain limits, and the money would
circulate in the economy in a perfectly legitimate way. It is unlikely
to be spent on alcohol or drugs, will prevent people resorting to fraud
or theft to make ends meet, and improve the health of the recipients in
their old age.
As
for the new State Pension, there is a discussion now in hand on the
Turner proposals. May I suggest that whatever is adopted, it is not
then immediately undermined.
MAY
25th 2006
The Turner
proposals, which were an ingenious compromise to set out a long term
pension plan for the country which could receive all party support,
have been subjected to further compromise by the Treasury on grounds of
affordability in the context of their projected financial management.
At least this means that the plan has a good chance of being adopted
and stuck to, whoever is Chancellor and whichever party is in power.
This is good!! This is serious forward thinking !!! We have never gone
in for this before.
However, it does
not del with the problems of this year or the next five years, so these
problems must be dealt with on an ad hoc basis. OK. That is probably
the only way they can be dealt with. The thing to do is get the long
term plan approved and voted and deal with some serious problems
amongst those who have been hit hard through the failure of their
pension plans.
Your questions on the White Paper answered here: http://uk.biz.yahoo.com/moneyweekly/latestonpensions.html
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