"Ponzi schemes they are in the true definition - the payments for the pensioners today come from the payments made by the workers of today. Every day the difference gets bigger and as soon as the payments of today stop, the pensioners of tomorrow should be concerned"
Don't want to go off track but it's largely as a consequence of Government actions that Private Sector Schemes are stuffed and more workers will now end up relying on State Benefits. The State Pension is not funded though Government seeks to persuade us otherwise by the levy of a different form of Income Tax in the form of National Insurance.
Hutton is saying nothing about stopping payments. It is the level of current expenditure that is being questioned on the basis of changing demographics. This is contentious and you may have seen other threads on this forum that seek to use demographics to prove other theories like, say, the UK having a Muslim majority in 50 years.
Pay As You Go has long been one approach to pension scheme funding. It was the basis on which occupational pensions started in this country back in the 18th Century. Civil Servants who retired were compensated by the person who took their job. The State formalised such relationships and gave greater security by underpinning this promise for its employees by establishing Scheme. Unfunded Public Sector Schemes like AFPS are tested regularly by the Government Actuaries Department. Evidence that the population of Schemes is changing by living longer would be expected to conclude that Scheme Costs needed to rise. However, that is not a reason to throw the baby out with the bath water! Considered action is required, not shock horror story's about gold plated pensions, designed to stir up a reaction from workers in the Private Sector and perhaps oil change of a more political nature.
States can and do run up deficits by making political promises to gain favour (tax cuts versus say improved schools) or as a consequence of war. After World War 2 the UK did not try to re-balance the books in one Parliamentary term. It went for austerity but at the same time set up the NHS and developed Nuclear weapons. That was the choice our leaders took at that time.
Reducing the deficit by 2015 is as much a political choice. As is, say, a new Rail line from London to the North (£15 Billion plus) Trident(£20 Billion plus) both of which would clearly be out of the question for a bankrupt Nation.
If Hutton has carried out a genuine review and the Government moves towards legislation, seek evidence that is specific to AFPS as to why it must change rather than take a view driven by your wider political opinion.
