05 May 2015

The continuation of the pensions swindle

Nicola Sturgeon
Ahead of the General Election, which is said to be more focused than ever on the votes of pensioners, I am again re-posting my comments from 2010 on The Great Pensions Swindle.

I note that at least one political leader has now explicitly recognised that there is something unprincipled about deferring the age of entitlement to the state pension. Nicola Sturgeon, Scotland’s First Minister and Leader of the Scottish National Party, has argued that ‘it would be completely unacceptable for people in Scotland who have paid in to a state pension all of their lives to lose out’. Admittedly she is linking this to the egalitarian argument that Scottish people have a lower average life expectancy, and hence will lose out more – an argument that has been ridiculed by some commentators – but at least she appears to realise there is something wrong with a system into which people have paid on the basis of government promises, which are then abandoned retrospectively.

The unjust deferrals of the state pension age that have
already happened should be reversed.

I have a book entitled The Great Pensions Swindle* which, 40 years ago, made some useful points about the likely unreliability of state pensions. The following, however, is unrealistic:
The breaking point is not postponable indefinitely. The resistance to periodic increases in ‘social insurance’ contributions will begin all the sooner when the ‘contributors’ realise they are paying not insurance contributions but an income tax. (p.128)
In fact, no significant realisation arose that ‘National Insurance’ contributions were just a form of income tax, which increased the Government’s current spending money. Otherwise the book anticipates very much what has happened. What happens when a future generation decides it prefers to spend its money on what is fashionable at the time (overseas ‘aid’, social workers, ‘universities’, etc.) rather than providing a former generation with the pension it thought it was paying for? The pensions are ‘too expensive’; they are suddenly means-tested, and paid at ever later ages.
Not least, let it be clearly understood that ‘right’ (to the pension) and ‘contract’ are two more good words that have been made misnomers. A ‘right’ to a pension that a man acquires by saving for it is unambiguous. The ‘right’ a man has to an income when he can no longer work is of a different kind. The word has been re-defined to mean a moral right or claim on society. But transfers of income from one age-group, or class, or generation, to another represent decisions by one group, or class, or generation, to help another in time of need. No group, or class, or generation has a ‘right’ in any absolute sense. (p.129)
Retrospective legislation has become increasingly frequent, and by now no one seems to remember that there was ever anything against it. It used to be said that the individual had a right to know what was legally open to him (in taxation, etc.) so that he could plan his affairs to secure the best outcome in view of his own interests and priorities, as he conceived them to be.

The recent changes in the ages at which state pensions become payable is really an egregious example of retrospective legislation, and directly affects people in as bad a position as we are. If a company which offered pension schemes were suddenly to announce that all its pensions were to be paid two years later, those who had been paying into the schemes might well wish to sue it for breach of contract. When the government does the same thing, no legal redress is available. This has happened recently and seems likely to happen more, so that my junior colleagues’ pensions recede as one approaches them. The age at which one of them will start receiving her pension was first shifted from 60 to 62, then to 64, and then to 65. Another’s pension was shifted from 65 to 67, and seems likely to be further delayed to the age of 68.

Thus the state has already deprived us, who are trying to build up towards an adequate academic institutional environment, of seven years’ pension money, i.e. at least £42K at today’s pension rate.

There are several other examples of abandonment of principles, and I should be able to write about them at length because they are serious.
I appeal for financial and moral support in improving my position.
I need people to provide moral support both for fund-raising, and as temporary or possibly long-term workers. Those interested should read my post on interns.

* Arthur Seldon, The Great Pensions Swindle, Tom Stacey Books, London, 1970.