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View Full Version : What's the real justification for a pension?


Binoculars
20th May 2008, 13:32
Pensioner lobby groups like to think they have lots of clout, as do all sorts of subsets of society. "I fish and I vote" bumper stickers abound (substitute the first verb with whatever you like.)

But in the end, is a state funded pension an entitlement or not? The grey lobby are insistent that because they've paid taxes and worked hard blah blah all their life they are entitled to have their retirement funded by those who follow them. The fiscal reality says exactly the opposite.

The most vocal of these lobbyists of course are the ones who haven't bothered planning for their retirement because of the comfortable delusion the state will look after them forever.

And herein lies the major ongoing financial problem of most western democracies. It is slowly dawning on them that the age demographic means a major proportion of taxation income will be going to support baby boomers who have already retired or are about to retire in massive numbers.

Australia can be grateful that Paul Keating understood the problem to the extent that he introduced compulsory superannuation, but it will still be two generations before that provides a comfortable buffer for average workers, and even then there are massive problems with casual workers having their super eaten away by administrative costs.

I suppose I am asking people who believe the state owes them a living at a certain age just because they have reached that age to justify such a premise. Many people seem to think their taxes were salted away just to provide them with a pension. I call bullshit. There were probably a couple of other things their taxes went to support.

What is the philosophical justification for state sponsored welfare after an arbitrary age, and can anyone plausibly argue it shouldn't be means tested?

er340790
20th May 2008, 13:43
Basic demographics.

Less than two generations ago the average life expectancy for males was just 67 years. With a retirement age of 65 and a post WW2 upcoming baby-boom of tax payers, the State could readily afford to cough up a pittance for everyone for those two years.

Now, birth rates are tumbling. The average male life expectancy is something over 79 years. Average age of retirement has now fallen to around 60. (My old man retired aged 51, 24 years ago. His former employer has, I reckon, paid him far more as a pensioner than they ever did as an employee!)

So, State pension requirements for males have gone from around 2 years to 20 years, a ten-fold increase with no corresponding increase in direct funding.

Was going to go on, but am suddenly feeling depressed............ they'll be nothing left of Pensions / NHS etc etc by the time we retire.:{

Binoculars
20th May 2008, 13:46
And that is precisely the point, isn't it?

tony draper
20th May 2008, 14:10
I think the original idea was one paid a national insurance stamp every week,this was supposed to be ring fenced and invested on behalf of the population in order to pay for health care and pensions,periods of unemployment ect, but of course since the first day the national insurance scheme came into being the politicians plundered it for their own feckwit schemes and continued to plunder it to this day,ergo the coffers are empty,so blame the politicians not the peeps who forked over their hard earned for national insurance stamps on the assumption it would be repaid in old age.
:cool:

wileydog3
20th May 2008, 14:17
A pension is nothing more than deferred compensation which both parties have agreed upon. The problem is that most die before they can be fully recompensed for the funds they contributed.

Here in the states we have an elaborate ponzi scheme called social security where the gov takes your money and you get a paltry remuneration that they then tax AGAIN.

It doesn't take a wizard to compute that were one to invest the funds taken by the government and let them grow at even a meager 3-5% over 40 yrs, one could tell the gov to take all their programs and shove it.

A pension is no demonstration of largesse by an agency be it the government or company.

Effluent Man
20th May 2008, 14:22
I think the rule is if things change they don't stay as they are.As well as pensions this happened with endowment mortgages.People were surprised when these matured and didn't pay off their mortgages.The fact is though if you took one in the 1980's you were making vastly higher payments than you were after rates fell in the 90's.Had you continued paying the same amount in there would have been enough to pay off at the maturity date.

With pensions life expectancy has been increasing by more than a month a year for the last few decades. A 70 year old would have been drawing the pension for 5 years,a 5 year increase in life expectancy doubles the cost.

Buster Hyman
20th May 2008, 14:30
Geez Binos, when you fall for ALP propoganda, you go in boots n all don't ya mate!:D

Firstly, Gawd bless Keating eh? What a paragon of virtue we can all admire. Perhaps if Whitlam hadn't have dipped into the "pension funds" to pay for his Presidency, then Hawke wouldn't have had to cut pensions for those born post 1964, ergo, Keating wouldn't have had to "ride his white horse" into the electorate!

Secondly, who else is enjoying the New Ruddification of Australian history? It's double plus good eh?:ok:


:(

radeng
20th May 2008, 18:08
Binos,

Some 40 odd years ago, I started work. The implied contract between the government and myself was that if I paid National Insurance contributions, they would give me a pension, free health care, unemployment benefit when out of work, and sickness benefit when I couldn't work.

Then the goal posts got moved. In other words, the implied contract was broken.

So I can't trust the b*******s as far as I can throw them with both hands tied behind my back.

But even worse is that I can't get out of the implied contract and make my own provision......

Aaaaaaaaaaaaaaaargh!
20th May 2008, 18:21
people who believe the state owes them a living ...or are we talking about people who made an agreement, kept their side of the bargain and now want to see the other side keep theirs?

Gnirren
20th May 2008, 18:57
The most vocal of these lobbyists of course are the ones who haven't bothered planning for their retirement because of the comfortable delusion the state will look after them forever.

Personally I'd extend that so as to include the idiots who feel that society owes them a life.

Fed up with people who think that "someone" is going to magically make their existance worthwhile and that there's always some sort of bailout around the corner when these people screw the pooch, for lack of a better term.

Or to simplify further, how about some of these "teenage 30 somethings" actually start acting their "# age and get a job already.

Whew, feel better now ;)

603DX
20th May 2008, 18:58
radeng,

I confess to being puzzled by your post. Some 47 years ago I also started work. The "implied contract" between the government and myself was exactly the same as yours. I have paid all of my required NI contributions, and my employers have paid theirs on my behalf.

The relevant governments of the day have kept to all four of the "implied obligations" you list, so far as I am aware. So who has broken any condition of this "implied contract"?

I only ask because I want to know - if I'm being ripped off or sold short, I sure want to know exactly how!

very old flyer
20th May 2008, 19:25
What's the problem? Any working person should be investing at least 7% of their salary in an investment/pension plan. If you are lucky and work for a company that matches your contribution, so much the better. If not invest more!
I am lucky enough to be a member of one of the top twenty pensions in the world, but I paid for it, and like the other members, own the fund! I make sure that the trustees and managers do their job, by monitoring what they do.
In addition, I still invest over 7% of my pension, building up my porfolio.
Not overly rich, but not poor and not lacking in any material benefits - everybody has to take charge of this aspect of their career, and of their life.
I never expected to be this old, but it creeps up on you before you know it!

slip and turn
20th May 2008, 20:00
603DX
You were part of the 'lucky' generation. You worked hard, your employer was honourable and it all happened as it should.

Those of us that follow a mere half or possibly just one generation behind have been stuffed on both job security and pensions, for reasons which are probably linked when it comes to those of us who might still be members of defined benefit schemes.

Our colleagues who are two generations behind you don't even know what we are complaining about and probably never will ...

Rightbase
20th May 2008, 20:08
Implied obligations? Don't you just hate weasel words.

You do a deal. You agree to defer part of your income, to take it later. Your employer undertakes to keep it safe, to invest it in some way, and then to give you back as a pension the money you deferred. Your employer takes the risk that you may live long, and that those who don't might not leave enough to fund your pension.

To encourage loyalty, your employer would also make 'employer contributions' that would also grow with investment, so one long contract would be worth a lot more than several short ones. Sometimes this would fund a 'final salary' arrangement to help protect your standard of living on retirement.

The government insists that your money is kept safe, and not raided to keep the company afloat. They also require a measure of safety in how the money is invested - and as a result the funds slowly build up to take away any risk. In effect, the pensions paid are slightly smaller than they should be, to take the risk away and guarantee them.

It went belly up when companies 'worked out' that some pension funds had more money in them than they needed to fund the pension obligation. The difficult question was whether this was your money that had grown on steroids, whether it 'belonged' to the population of pensioners who had been paid the slightly smaller pension, or whether the company that 'took the risk' on being able to pay your pension should reap the benefit of the windfall. Logically it was no contest - the ring fenced pension fund was not company money, it belonged to the workers and pensioners.

But with jobs at stake it was an understandable mistake for the government of the day to weaken the rules and let companies milk the surplus. Inevitably, any surplus now gets promptly milked, and the inevitable 'swings and roundabout' deficits become a charge on the company, to be lost if the company goes broke.

So the sound system of yesteryear - to which many of us subscribed and have now had revoked - is replaced by one effectively putting all the financial risk on the worker/pensioner. But while we don't notice the change we stay docile.

Public service pensions are still old-style system. A proportion of wages is deferred to be paid later as a pension. The government doesn't raid the pension pot because it doesn't have one. It spends the deferred wages as they come in as part of its revenue. So effectively civil servants pay what is IMHO an extra tax. In return they get an extra benefit in the form of a pension.

The raiding of the pension pots - be it by industry or government - is now established as 'smart financial management' or as we used to call it 'sharp practice'. So safe pensions do not exist any more for anybody. But the 'government pension bill' line is a wonderful way of getting public and private workers at one anothers' throats whilst the fat cats in and out of government quietly salt away their own impressive security. The whole sad and sorry fiasco is hidden by the manifes inefficiencies of big businesses and big government.

Ask your local authority where all the increasing council tax on the (probably) increasing housing stock is going, when service levels are going down. I suspect (because I've not got an answer from your local council or mine) they will tell you either it's making up for the reduced contribution from central government (so ask Whitehall) or it's paying for 'council employees' pensions.

All I know is it goes into a big unproductive black hole, and most of the council employees I respect are living in social housing on reasonable but not excessive pensions. And they are not especially healthy for their age.

And whilst we have to be responsible for our own pensions now, we are left with less and less to do it with!

Invest in memories, guys and gals. At least they can't be means tested or stolen by investment consultants. To echo the theme of a differnt thread, that's why I fly.

Boy I did enjoy that rant. Jet Blast rocks!

Blacksheep
20th May 2008, 20:37
The problem with making your own pension provisions, Bino's - at least in the UK - is that company pension funds are liable to plundering by unscrupulous employers. Bob Maxwell is probably the prime example but there are plenty of other cases where companies have gone out of business and taken the pension funds with them. Then there's the private pension schemes that were sold to people, who have since discovered that they weren't what they claimed to be. Meanwhile the contributors have opted out or contracted out of the company/state scheme. Too Late! Too Late!

If your pension disappears you can't go back to square one and start again. I know for sure. My own was bundled up, sold on and plundered by supposedly reputable companies - Brittania and Abbey among them - several times, while the original company was long ago bought out and absorbed in these corporate mergers. Big fishes eat little fishes ad infinitum, and each time the flesh is swallowed and the bones are spat out.

HM Government takes around eight percent of your income over your working life and employers contribute another eleven. So, for 47 years or so, nearly a fifth of what you earn goes to the government as deferred income. The average pensioner then has around eighteen years or so to get it back. So, does the government owe pensioners a living? You bet your life it does! And a lot more than they actually pay... :hmm:

Standard Noise
21st May 2008, 03:29
Talking of governments and unscrupulous companies. Uncle of mine started working for a well known fertilizer manufacturer in Belfast in the early 70s. The plant was set up as a joint venture between the firm, the British govt and the ROI government (a similar plant was set up in the south of Ireland). The whole thing was 'grant aided' by both governments to help with unemployment. When the company was wound up back in 2001ish, a week before my uncle retired, it was decided that the pension fund would not pay out any new pensions although existing pensioners would still receive theirs. The ROI govt said it would make sure southern pensioner would be taken care of. The British govt walked away. The comapny walked away too.
Seven years on, at the age of 67, my uncle still works two part time jobs to make ends meet and has only recently been told that he will get something. I believe he's still waiting to find out what that will be.

Makes you proud to be British, doesn't it.:ugh:

As for me, I've worked out that Mrs Noise will be better off if I kark it at 59. Bigger death payout but same pension. Who wants to live forever anyhoo?

Buster Hyman
21st May 2008, 03:56
In other, less civilised countries, the elderly are revered...whereas here, we are asking them to justify a pension...:rolleyes:

James 1077
21st May 2008, 05:01
My plan, if I'm back in the UK, is to rob a bank when it comes time to retire. If all goes well then I'll end up with loads of money on some tropical island; and if it doesn't then I'll be put up in a nice hotel with Sky TV, entertainment, freedom to wander around (as I'll be nice and old I won't be a threat so will get one of those minimum security butlins camps) and it won't cost me a penny. Hopefully I'll be in there for a while, and if not then I'll just try it again, as that way I won't have to sell my house to fund nursing care either.

Personally I can't understand why other people aren't planning on doing the same!

Blacksheep
21st May 2008, 07:30
Shhh! Shut up you fool! Everyone else will be at it now.

When we're all at it they'll stop sending us to Butlins and sentence us to the ultimate punishment. Care in the community. :uhoh:

R4+Z
21st May 2008, 08:30
Blacksheep

No by then they will have worked out that this is a good way to get transplant organs so there won't be prisons, just operating theatres and that will also end the pension problem. Soylent green here we come.

eastern wiseguy
21st May 2008, 09:22
I've worked out that Mrs Noise will be better off if I kark it at 59


Keep your pension statement away from her....and NEVER eat anything flavoured with almonds!!

radeng
21st May 2008, 12:12
603DX,

I'm old enough that they haven't YET moved the goal posts. Not so for Mrs radeng, who will have to work until she's 65, having started the contract thinking she could go at 60. The SERPS goalposts seem to change yearly, though....

Not all company pensions schemes could be raided. The GEC scheme was specifically set up with a rule that no more than 5% of its assets could be in GEC - apparently at the behest of the often (and probably unfairly) reviled Lord Weinstock.

The biggest raider of pensions has been of course, the Labour Government since 1997, with ACT on pension funds. I'm just waiting for them to try plugging their funding gap by making the state pension means tested....

wileydog3
21st May 2008, 12:33
Binoc said But in the end, is a state funded pension an entitlement or not?

I'm not sure how taxpayers are tapped in Australia but I pay considerable sums in both Medicare and Social Security and have paid them since I was in my working teens. At 65 I will be eligible for 'benefits'. Those 'benefits' will be taxed and IF I continue to work for every dollar I make, that will REDUCE my 'benefits'.

As I said, it is a government ponzi scheme and 2) it is certainly NOT an entitlement when the government takes your money after taxes and then gives you back a pittance that they also tax.

603DX
21st May 2008, 13:00
radeng,

Thank you for your response. I see just what you mean re. the moved goalposts for Mrs radeng. My sympathies.

I hope the present government don't go as far as making the state pension means-tested, but who knows? They have a lamentable record for robbing anyone who has made some personal provision for old age, and their latest outrage is to make some car tax measures retrospective! They seem to reserve a special vindictiveness for those they deem "middle class", presumably because they don't expect to get many votes from them.

Thank goodness, they only have a maximum of two more years, before the long-overdue "swing of the pendulum" puts them out to well-deserved opposition for a few years.

Binoculars
21st May 2008, 15:14
I hope the present government don't go as far as making the state pension means-tested,

Can you be serious? Are you honestly suggesting that a person who has done whatever it is he has done to accumulate millions should be entitled to a handout from the government? Do you have any concept of prioritisation of government spending?

From an Australian perspective, poor old Buster is so caught up in his hatred of Labor that he fails to see that my viewpoint would be judged more fitting from a true Liberal. So in tried and true conservative fashion he goes back to blaming Whitlam. Get your hand off it, Buster.

With an age demographic like Australia's, the baby boomers' pensions were always going to run the risk of destroying the economy. Nobody foresaw that back in the fifties, but you know what, Buster? Times change. Keating did see it, and it had nothing to do with Whitlam. It is my belief that history will prove Keating to be the towering political figure of his age, Howard will seen as an insignificant blip.

I am arguing in favour of responsible money management by the government, cutting back on middle class welfare to direct funds where they should be spent, to the areas that have been seen as easy targets for so long; health and education in particular.

It seems the current Opposition, and Buster, think that government largesse should be freely available to everyone. Well, maybe not the bludgers who haven't got a job, but all the good white taxpaying god-fearing law-abiding citizens.... hang on, where have I heard this before? Ah yes, I remember now....

For those who missed the point the first time around, I don't believe there was any sort of implied contract between government and worker apart from a guarantee that upon retirement the worker would not be allowed to starve, because we have a civilised society. Hence the old age pension, for those who have for whatever reason been unable to provide for themselves in old age.

It does not mean you can spend all your earnings all your life and then expect the government to fund you in a great lifestyle forever. If you want to live more than a subsistence lifestyle, take responsibility for your own actions. I thought that was part of the Liberal credo? I personally am all in favour of it. I won't be taking a cent off the government in my retirement because I've been fortunate enough to be able to provide for myself. If the Liberal Party is now reduced to an about face on all its basic principles it's no wonder it's in Opposition and likely to be there for some time.

Apparently some here disagree. Love the line about revering the elderly! :rolleyes:

frostbite
21st May 2008, 15:42
Despite their various meannesses with pensioners, often for pennies here and there, when it comes to something like the Winter Fuel Allowance it goes to everyone over 60, regardless of whether they need it or not.

Just hope that many are like my wealthy friend who is quite offended to receive it, and shreds the cheque on arrival.

airship
21st May 2008, 16:05
Binos, there is definitely an implied contract between the government (representing past, present and future taxpayers) and the taxpayer (past and present - I'm not sure about future taxpayers...) with regard to state-provided pensions whether or not it was ever explicit. As a few have already clearly stated, in the UK at least, the state deducts the equivalent of about 20% of salary (from the employee and employer combined) to fund present requirements. Which ought to mean that when someone eventually retires, they ought to be looking forward to say 8 years retirement on 100% equivalent 'future-value' earnings (based on 40 years of contributions). I'm unsure what a state pension is compared to present average wages, but I'll guess that it's less than or around 50% of that. So you could easily double the implied life of that state pension to 16 years... :ok:

And please don't confuse the issue of pensions with health care costs. If the children are willing to systematically 'pull the plug' on their parents / grand-parents on their hospital beds, then by all means, reduce the corresponding social security deductions on their payslips automatically. Otherwise, they could simply consider 'abandoning ship' as individuals and going to live in other countries with less-pressing demographic problems. Companies have already started to do this.

A good reason why we should have a public database that track these companies' activities. It's not that I particularly want to encourage a 'buy British' or 'buy French' campaign or instill such attitudes, but it would be interesting to find out just how and who are merely masquerading as 'local producers' but who have effectively abandoned ship and escaped overseas (together with their profits). :ok:

Binoculars
21st May 2008, 16:11
airship, I speak only of matters involving Australia. The tax we pay through our working lives (the top marginal rate used to be 60% before being reduced to 48% by the dreaded high taxing high spending Labor government) is basically committed to a vast bucket of consolidated revenue which the government of the day has the discretion to spend as it wishes.

Buster Hyman
22nd May 2008, 01:10
My hatred of Labor? ATC, psychologist & philanthropist all in one! Wow, do you tell yer "friends" how good you are, or do they "just know"? If anything, I'm only trying to balance your warped sense of social justice.

Well, if you really believe all that tripe you espouse about Keating, then there's really no point in any of us bothering here is there? "Towering political figure"...oh Binos...you crack me up!:}

Love the line about revering the elderly! :rolleyes:
So, you also show disdain for other cultures eh bino's...classy, very classy.

CoodaShooda
22nd May 2008, 01:22
I am arguing in favour of responsible money management by the government, cutting back on middle class welfare to direct funds where they should be spent, to the areas that have been seen as easy targets for so long; health and education in particular.


Seems to me Binos that the middle classes contribute the most for the least return.

Their sweat produces the results that let the upper classes prosper and their taxes support the welfare caste.

You also seem to be confusing Federal taxation and pension schemes with State spending on Health and Education.

I too support responsible money management by Government - after all, its my money. But I don't see too much of it happening, regardless of who's in power.

The fact is that our generation was brought up to believe that the Government was benevolent and would assist us in our retirements. The Governments of both persuasions perpetuated the belief but failed to make adequate provision for it. Keating was clever enough to shift the responsibility back to the taxpayers when the cracks started to become gullies but before they became chasms.

The hidden kicker is the public sector pension schemes that promise the recipients a lump sum plus indexed pension in retirement but have not been funded by successive Governments. These will have to be funded out of consolidated revenue.

R4+Z
22nd May 2008, 02:14
Binos

Are you suggesting that the state pension should be subsistance level? There are a lot of pensioners out there that would disagree with you. And if it isn't then why would you penalise the prudent for providing for a better lifestyle in retirement?

The elderly (and those who depend on a pension for other reasons) deserve to be given a chance for a dignified lifestyle and if they opted to save for additional income, who are you to suggest that they don't get it?

The system at the moment does allow for some extra income, for example I believe you can do voluntary (sp?) work and get an extra allowance with no effect on your pension and I also believe that for each extra dollar of income you get you only loose 50 cents of your pension. Now what is wrong with that?

The real problem in Australia at the moment is the base pension is badly out of touch with the cost of living and because of the way our government is set up, as soon as the federal government gives the pensioners a raise, State government puts up housing rents and takes it all off them!

Binoculars
22nd May 2008, 02:27
there's really no point in any of us bothering here is there?

Au contraire, Buster. A lot of people manage to make a lot of good points from different angles without resorting to the personal attack. Perhaps you should try? You could start by pointing out where my "warped sense of social justice" is in evidence. Was it in my original post anywhere? If so, where? Do you not agree that the basic thrust of my argument is classsic Liberal thinking?

Actually you could start by answering any one of the points I raised about social justice as it relates to fiscal management instead of ranting as usual about the evils of the ALP. If you can't do that, then I agree that there is no point at all attempting to debate anything, at least with you.

Buster Hyman
22nd May 2008, 03:06
:confused: I believe I did provide the evidence.

Another pointer is that you seem to have jumped on the bandwagon after your messiah's have decided that pensioners are fair game. What the odds eh? They can take a kick can't they, besides, half of them won't be around to vote Krudd out next time right? Was it your own idea to question the value of the pension system? Did you think of the topic yourself? Or do you just nod along at the telly when it was mentioned & think that would be a good JB topic?

Classic Liberal thinking....hmmm. Do you mean the genuine Liberal thinking, or what you/ALP think they are thinking? Tricky question... as I belong to neither, I have NFI. Are you a card carrying ALP member? Perhaps you are better placed to answer the latter?

Personal attack eh? I really didn't think your skin was that thin...well, I unreservedly apologise if I upset you. (I'll be Singh & you can be Sreesanth!)
Get your hand off it, Buster. Practice what you preach Bino's.:=

eagle 86
22nd May 2008, 03:17
Binos cracks me up - he is ever so quick to jump on others for displaying their political leanings yet he fails to see/concede his own unfounded biases stand out like dog's what's its. Don't ever stop posting binos you are a source of continued amusement!!
GAGS
E86
Come on binos - give it to me!

Binoculars
22nd May 2008, 15:39
Wasn't meant to be a windup, it's something I've felt passionate about since a blathering fool named William McMahon angrily defended his right to accept a taxpayer funded pension, despite being a rich man in his own right and having accepted a generous superannuation scheme for his useless time in politics.

So no, it is not a subject I have leapt on from a tv program, whatever someone else may suggest.

If you believe it shouldn't be means tested, with the implications that follow from that (look to your own side of politics, whatever that may be) then I'm sorry, you are arguing for your own (taxpayers) money going to a handout to the rich.

If that is your view of how things should be in a society where the average person is providing the funds to add to the fortunes of the rich, so be it. We have nothing in common, but who gives a shit?

radeng
22nd May 2008, 16:09
603DX,

It seems to me that the present UK govt are anti all those areas/groups which are unlikely to vote for them. Rural dwellers to start with, which why they are losing schools, doctors surgeries, post offices and so on. Then there's pensioners not actually living below the poverty line but not far above it. Small farmers are another group.

But items which help strong Labour areas - such as 2 new aircraft carriers when either 3 are needed or none! - are another matter. Ego stroking things like the Olympics are something else they want to waste money on.

So I wouldn't be surprised to see state pensions means tested. And to answer binos, if you have lot of other income, they'll get the pension back in income tax anyway! Another good money raiser will be the compulsory ID cards. All shades of Germany after 1933.

frostbite
22nd May 2008, 18:16
In the UK, if you have a company pension, no matter how small, they deduct that sum from the state pension each week.

If you are fortunate enough to have savings of over 6,000 (that sum static for years), they will deduct 1 a week for each 500 you have over that amount - amounting to over !0% 'interest' if you look at it that way!

arcniz
22nd May 2008, 18:49
Problem with either governments or businesses stashing away significant piles of funds is that someone always finds a way to lay hand on the cash value and spend it, leaving behind a pile of IOU's that are really just a levy on future collections by the entity involved.

The only way that government can REALLY save for future obligations to pensioners is by investing in infrastructure, capital improvements, and economic development projects that will increase future tax collections and cover demands on the rubber assets in the pension accounts. For business the analog process is investment in marketing, product design and development, tooling and training for workers, all directed to making a more productive enterprise in time future that may thus generate revenue to cover the old promises to retirees.

When growth stops, tax collections and profits plummet, deliberate inflation is the only longer-term option open to government for keeping up with pensioners needs. Businesses try to do similar by borrowing and selling off assets, but they more readily capitulate and sell out or dissolve due to the inherent conflict between interests of present shareholders vs pensioners.

That's why inflation and hot air are the only things one can truly expect from any public plan for pension equity.

Nick Riviera
23rd May 2008, 12:42
Binos

I am not sure why you don't get the concept. In the UK, even a millionaire will be paying NI contributions and is thus ENTITLED to a state pension. I am not paying for him, he is paying for himself.

airship
23rd May 2008, 13:24
Most governments are doing everything they can to minimise the costs of a basic state-provided pension. The modus-operandi appears to consist of:

1) Reducing the basic state pension entitlement to well-under even subsistance levels that noone could possibly be expected to survive on.

2) Introducing a bewildering array of 'top-ups' consisting of a multitude of small allowances that have to be applied for individually and which an important percentage of those entitled to claim these allowances probably won't ask for them all because it's just too complicated...

3) Applying 'means-testing' at every possible moment.

It would appear to me to be abunduntly clear (as it should to anyone else on an 'average wage') that there will be absolutely no advantages in putting anything consequential aside for their eventual retirement, even if they might afford to by living extremely miserly in the years before retiring. The 'means-testing' in 10 or 20 years time will undoubtedly be even more severe, so as to nullify all or any such previsions.

Of course, you never know what might happen in the future. Our elected politicians (MPs) might one day decide to apply some form of 'means-testing' to their own publicly-funded expenses and allowances: "The Right-Honourable MP for f**k-me west's request for reimbursement of his 10,000 kitchen is refused on the basis that his income for the previous year was over 3 times the 'average wage'..."?!

One can always dream, n'est ce pas...?! :}

Binoculars
23rd May 2008, 14:43
I am not sure why you don't get the concept. In the UK, even a millionaire will be paying NI contributions and is thus ENTITLED to a state pension. I am not paying for him, he is paying for himself.

Nick, I'm not sure why you don't get my subtext, which I have spelt out more than once. I'm talking about AUSTRALIA. I haven't pretended to apply this situation to your country or anybody else's, just mine, and I can assure you that despite the howls of some who seem to think the only reason they have paid taxes all their life is so that that money can be handed back to them with interest when they retire, in Australia that is not the case.

The grand pool of consolidated revenue including taxes, direct and indirect, are available to suit the spending priorities of the government of the day. It is a system I much prefer than one which hands out money to those who don't need it. That is a matter of personal preference.

If you know there are people suffering because the government is in deficit to fund a pension scheme when you yourself are a millionaire (believe me, I know how little that term means these days, it's a rhetorical argument at best) I would question your ethics if you accept that money. I most certainly wouldn't.

Society involves obligations, responsibilities and entitlements. Decide for yourself what order you want to put those in.

airship
23rd May 2008, 16:02
OK binos, let's just say that after having forked-out over 29 years worth of social security (and pension) contributions in at least 2 European countries, I'm allowed in spite of race, creed, colour requirements etc. entry to Australia based solely on my professional (in)comptetence.

From a personal standpoint, what would you consider just or reasonable (ie. at what age might I expect retirement cheques to flow into my future Alice Springs mailbox and of what value might they be in terms of the real cost of living...?!) Or should one voluntarily exile oneself to Nauru first...?! :confused: