Wednesday, March 31

The pensions crisis in the UK

This struck me as pretty much fair. This Labour Government and potentially the incoming Conservative government wont say the truth that everybody knows, we are in a world of hurt and are living much beyond our means. We are busy disbursing money abroad, we are spending money like drunk sailors on the public sector (52% of UK economy is in public hands), subsidies and welfare spending out of control. See what happens:

"One of our state retirees, paid, over the course of his entire career, a total of $124,000 towards his pension and health benefits. What will we pay him? $3.3m in pension over his life and $500,000 healthcare benefits – a total of $3.8m on a $120,000 investment. Is that fair? "A retired teacher paid $62,000 towards her pension and nothing – nothing – for full family medical, dental and eye coverage over her entire career. What will we pay her? $1.4m in pensions and $215,000 in healthcare premiums over her lifetime. Is that fair for all of us and our children, to have to pay the excess?"

No, me and my son have to pay for all the promises made by successive idiot governments. Pay as you go. Not only do I have to pay for these buggers, I have to put aside money for my own pension. And to pay for my kids education and for their step on the property ladder and and and.  And because the damn government is hoovering up money like crazy to pay for the debt and removing tax relief on pensions, the returns on my pension are derisory.

Damn morons. Look at this. I quote:

Yet another of those pledges that politicians so cheerfully scatter about as an election approaches came at the weekend from David Cameron. "You have my word," he told a question and answer session organised by Saga Magazine, that pensioners' free bus passes, winter fuel payments and free television licences (over-75s only) will be "protected" by the Conservatives. So that's another £4.2bn that no party will cut, alongside the budgets for schools and the NHS.

A promise to "protect" something leaves wriggle room: fuel payments, for instance, might not be uprated in line with inflation, and Labour is already raising the age of eligibility for bus passes. But no party dare let itself be portrayed as the enemy of old folk who, in the British politician's mind, are all shivering in front of one-bar electric fires and subsisting on stale bread with a thin covering of rancid butter and cheap jam. That image might once have carried some rough approximation to reality. Not any more.When Labour came to power in 1997, poverty among pensioners was more common than among the rest of the population. Now pensioners are least likely to be poor. In 2007-08, 22.5% of us suffered relative poverty (below 60% of median income after housing costs), but only 18% of pensioners. Children were far more likely to be poor (31%) as were working-age parents (26%). When Labour was in office in the 1970s retired households accounted for the majority of those in the bottom fifth of income distribution; now they account for not much more than a third. This is only partly the result of Gordon Brown's pension credits. Owner occupation, house-price inflation and private and company pensions have done most to transform old age from a time of penury to one of affluence.

So what’s with the pensions here compared to the USA?

As shadow minister David Willetts points out in his recent book, The Pinch, social justice demands redistribution from the old to the young, not the other way around. The baby boomers who will draw their pensions over the next 10 years will be even richer than the present generation of pensioners, and they hold more than twice as much wealth as the generation after them, now in their late 40s and early 50s, who have suffered from the decline in occupational pensions. Yet the baby boomers are due to get far more out of the welfare state – possibly as much as 18% more – than they ever put into it. In the youngest age groups, millions struggle to enter the housing market, and have no prospect of building up anything like the pension entitlements of their elders. Collectively, those now aged 25 to 34 have less than a third of the wealth held by those in the same age group in the 1990s.

Go figure

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