A million to march on Westminster!

[Serial_Apologist]

The fact that government is already having to rely on its borrowings to continue making these payments should itself ring allthe necessary warning bells loudly enough. Apart from any other considerations, it's simply not reasonable or practical that taxpayers should be led to expect that governments are able to be entrusted with pension planning, especially as they have so many other calls on their time and responsibility, so they should get out of it; the latest fracas over governmental mismanagement and misappropriation of public sector workers' pension contributions is yet another example that points to the need for a gradual governmental exit from involvement in the pensions market.

In principle, government safeguarding of NI contributions should avoid the vagaries of the market involved in private pension schemes, which is why this is a political issue.

[ahinton]

In principle, government safeguarding of NI contributions should avoid the vagaries of the market involved in private pension schemes, which is why this is a political issue.

But the government cannot "safeguard" NI contributions; that's the whole point! It never retains them for more than a few days before paying them out again to benefit recipients including state "pensioners"; what kind of "safeguarding" is that?

All real pensions are subject to the vagaries of the market because they are savings plans and, as such, have to invest the contributors' contributions over a period of time for the purpose of building a pension pot for each which can be vested when the contributor chooses to do so and, in the case of personal pensions funded by the self-employed, these may be vested at any time between 50 (or is it now 55? - still can't remember!) and 77 (the likelihood being that the upper age limit will continue to increase and will eventually be abolished altogether; how else could they do this? The state, on the other hand, doesn't invest any NI contributions at all because it needs to use them almost immediately upon receipt so that, along with top-ups from its borrowings, it can continue to pay state benefits including "pensions" as it is doing for the time being; it seems to me to be a strategy (if one could dignify it with such a term!) that's at least as risky as subjecting one's pension to the vagaries of the market.

[Serial_Apologist]

But the government cannot "safeguard" NI contributions; that's the whole point! It never retains them for more than a few days before paying them out again to benefit recipients including state "pensioners"; what kind of "safeguarding" is that?

All real pensions are subject to the vagaries of the market because they are savings plans and, as such, have to invest the contributors' contributions over a period of time for the purpose of building a pension pot for each which can be vested when the contributor chooses to do so and, in the case of personal pensions funded by the self-employed, these may be vested at any time between 50 (or is it now 55? - still can't remember!) and 77 (the likelihood being that the upper age limit will continue to increase and will eventually be abolished altogether; how else could they do this? The state, on the other hand, doesn't invest any NI contributions at all because it needs to use them almost immediately upon receipt so that, along with top-ups from its borrowings, it can continue to pay state benefits including "pensions" as it is doing for the time being; it seems to me to be a strategy (if one could dignify it with such a term!) that's at least as risky as subjecting one's pension to the vagaries of the market.

OK I should have said "ought to" instead of "should". But surely it should be desirable and possible for government to safeguard monies placed in its care in the form of NI contributions, in the form of a national(ised) asset? The way government receives contributions and deploys them for purposes other than state pension payouts would cease, and the fund would rise or fall in line with the value of the £, rather than be subject to investment in firms or foreign currencies that can go bankrupt

[Lateralthinking1]

ahinton - My point was this:

"......Seeing that no one knows what the economy will be like in 10, 20, 30, years, the only sensible solution both to the state and public sector pensions issues is to introduce two levels both to apply in principle from now.

One, a much fairer approach to pensions in line with earlier commitments and to apply if the economy is much improved in X number of years and two, something nearer to the Government's approach, though less draconian, if it isn't.

Why is this not being discussed? Is it just too logical? Would it prevent the Government from pursuing a political agenda?

I would see your analysis as a third dimension or arguably a realistic framework inside which my two would sit. I wouldn't welcome the spectre you conjur up, although I can visualise it. More to the point, electorally the political establishment would never declare it unless it was staring everyone in the face. In the meantime, we progress in what might or might not be la-la land but to do so only envisaging one scenario seems unwise. I'd like to see a policy of either/or. Agreement could be reached by such a strategy.

[MrGongGong]

Precisely. But my point was that money collected from employees (and employers) for public service pensions was stolen to be spent on whatever the governments at the time wanted to spend it on, with a promise that they would honour the pension contract when the time came. They did not create a proper fund. I'm not sure whether that makes them corrupt or incompetent, but it must be one or the other. To say there is no more money after they themselves have spent it is simply evil.

I think this really is a misreading of history
Governments have always used what they get in taxes of various sorts to pay for current projects
It's not really that your money that has been "stolen" but rather that the economy of the world has changed as have the demographics
if you had "saved" the money in a bank it would be worth much less anyway

the only person i've heard talk sense on pensions is a certain Ms Greer i think the phrase was "F*ck pensions , buy Art"

it might be dishonest but its hardly "evil"

If we really want Scandinavian levels of support then we have to be prepared to pay Scandinavian levels of Tax

[Serial_Apologist]

if you had "saved" the money in a bank it would be worth much less anyway.

If we really want Scandinavian levels of support then we have to be prepared to pay Scandinavian levels of Tax

Yes as regards the first sentance, but only in relation to the relative value of the £. If the state pension was abolished and we all went private, people would be completely at the mercy of schemes dependent on the market, in all its volatility. I am glad I've kept the bulk of my savings in a deposit account - they've kept up pretty well in relative terms.

And yes - we should pay Scandinavian levels of tax. Does anyone actually KNOW the effects of such tax levels on businesses staying or moving operations elsewhere?

[MrGongGong]

indeed

but its all dependent on the "market", and we are unlikely to get a government that thinks that there is an alternative

I would suggest buying fine string instruments ....... rather than a pension fund (if only there was money to do either )

whatever you do you can't predict the future
and as I have probably said before different people are able to cope with different levels of insecurity, looked at in the wider scheme of things the vast majority of people have very little financial insecurity to cope with compared to, for example, being totally dependent on a good harvest or even ones ability to play the violin to a high standard !

[ahinton]

OK I should have said "ought to" instead of "should". But surely it should be desirable and possible for government to safeguard monies placed in its care in the form of NI contributions, in the form of a national(ised) asset? The way government receives contributions and deploys them for purposes other than state pension payouts would cease, and the fund would rise or fall in line with the value of the £, rather than be subject to investment in firms or foreign currencies that can go bankrupt

It could indeed well be argued that such safeguarding as you're now talking about should be "desirable and possible" - at least up to a point. Were government to invest such monies, then this might just happen; on the other hand, if such investments, like any others can do, happened ultimately to go down the tubes or otherwise fail to live up to performance expectations over time, that would not count for much in terms of positive public opinion but at least it would be more honest and transparent than is the current situation. "Investment in firms and foreign currencies tht can go bankrupt" is indeed potentially risky, of course, but where else might you advocate that government could invest those funds to ensure their guaranteed security? As to their asset values rising and falling in line with the performance of the £, this is again not only totally market dependent but also heavily dependent upon the performances of other currencies, not least the Euro. There ain't no guarantees in investment life, but making no investment effort as is now the case with the NI "contributions" that the British government receives does at least guarantee investment performance failure!

[Serial_Apologist]

I know we're all urged to "do" something with our money, make it "work" for us etc. Why not just keep it in a large safe?

[ahinton]

Yes as regards the first sentance, but only in relation to the relative value of the £. If the state pension was abolished and we all went private, people would be completely at the mercy of schemes dependent on the market, in all its volatility.

Indeed - just as they are now! Which would you prefer - to be at the mercy of good or bad market performance or to be at the mercy of no performance at all becuase your "contributions" are not even being invested so stand no chance of growth?

I am glad I've kept the bulk of my savings in a deposit account - they've kept up pretty well in relative terms.

So far, perhaps - and you've presumably been quite lucky to date - but where do you suppose that the monies that you deposit are invested by those organisations with which you deposit them in order to produce what has for quite some time been (and looks set to remain for the foreseeeable future) a hopelessly meagre interest rate? - and don't you consider your deposits to be at the mercy of the vagaries of fluctuating interest rates just as you might otherwise be exposed directly (rather than indirectly, as now) to the vagaries of market performance were you to invest your funds elsewhere? It's all risky, for all that the degree of personal risk may vary from time to time. Financial advisors, lawyers, accountants and the rest used rightly to categorise deposits in banks, building societies, National Savings & Investments et al as low risk and they still are so comparatively speaking, but the banking and other economic woes have undoubtedly reduced their comparatively risk-free status quite considerably in recent times.

[ahinton]

I know we're all urged to "do" something with our money, make it "work" for us etc. Why not just keep it in a large safe?

...and watch its guaranteed dwindling in value while it's there? (assuming that no one's micked the safe in the meantime)...

[Lateralthinking1]

I do hope that I don't sense a politician's silence. My point was this:

"......Seeing that no one knows what the economy will be like in 10, 20, 30, years, the only sensible solution both to the state and public sector pensions issues is to introduce two levels both to apply in principle from now.

One, a much fairer approach to pensions in line with earlier commitments and to apply if the economy is much improved in X number of years and two, something nearer to the Government's approach, though less draconian, if it isn't.

Why is this not being discussed? Is it just too logical? Would it prevent the Government from pursuing a political agenda?

I note that the percentage of public sector pensions is falling as a % of GDP.

[Serial_Apologist]

I do hope that I don't sense a politician's silence. My point was this:

"......Seeing that no one knows what the economy will be like in 10, 20, 30, years, the only sensible solution both to the state and public sector pensions issues is to introduce two levels both to apply in principle from now.

One, a much fairer approach to pensions in line with earlier commitments and to apply if the economy is much improved in X number of years and two, something nearer to the Government's approach, though less draconian, if it isn't.

Why is this not being discussed? Is it just too logical? Would it prevent the Government from pursuing a political agenda?

I note that the percentage of public sector pensions is falling as a % of GDP.

I just feel overwhelmed by imponderables right now, Lat - sorreee

[ahinton]

I do hope that I don't sense a politician's silence. My point was this:

"......Seeing that no one knows what the economy will be like in 10, 20, 30, years, the only sensible solution both to the state and public sector pensions issues is to introduce two levels both to apply in principle from now.

One, a much fairer approach to pensions in line with earlier commitments and to apply if the economy is much improved in X number of years and two, something nearer to the Government's approach, though less draconian, if it isn't.

Why is this not being discussed? Is it just too logical? Would it prevent the Government from pursuing a political agenda?

I note that the percentage of public sector pensions is falling as a % of GDP.

I can't and don't presume to speak for anyone else here, but there's no "politicians' silence" from me, since (a) I'm not a politican and (b) my response to the post in which you write this indicates a lack of silence on my part.

[Lateralthinking1]

Maybe I'm missing something in which case my apologies. However, your lengthy response began "Or one could discuss the abolition of pensions altogether" and then continued with that theme. What I am suggesting is that you could be right to portray the current discussions as missing the fundamental point about there being no guarantees. However, in the real world of political negotiation and competition, those discussions will take place.

Of course, what you describe isn't new and in fairness you haven't suggested that it is so. We could therefore have accepted the view that there are no guarantees from the word go and not had any pensions at all. What concerns me slightly is that it isn't clear to me whether you feel that this would have been better for representing reality more accurately. While I dislike the politics and economics of fantasy as much as anyone else, pensions were delivered and crucially the fantasy of them being guaranteed made peoples' lives easier. Arguably it led to far greater productivity for reducing levels of anxiety.

I have one further thought. It is not one I propose, certainly not currently, but it could be used when it seems all is lost. If the Government really will not honour its commitments and goes ahead with its proposals willy-nilly, I would like to see the unions requesting that all of the savings are put directly into the pensions of low paid private sector staff. Not everyone. Just those who saved for decades and were punished by Gordon Brown's policies. It would put Cameron and Maude on the spot and show just how devoted they are to pensions for all the less well off in principle including those in the private sector. Make life difficult for them.