As I have previously said on this blog, the state now appears to feel free to change legislation in ways that are effectively retrospective, in that they make a mockery of past efforts by forethoughtful taxpayers – such as myself and my colleagues – to plan for their life after normal retirement age.
Commentators whom one might expect to be critical of such retrospectiveness seem to share the basic philosophy that it is not too unacceptable, sounding mildly disapproving at best but in many cases simply taking it as read that, say, the presence of a budget deficit justifies breaking what was once thought of as a relatively sacrosanct principle.
Ruth Sunderland, for example, refers to the complaint made by many women that the rapid shifting of the age at which they will start to receive their state pensions ‘simply does not leave them enough time to plan’. But she does not appear to complain of the sudden introduction of means-testing. Those who had been paying into the state pension scheme could not have planned for that change because it was retrospective, and they had no warning it was going to happen.
Having undermined savings efforts by breaking a principle in one area, the government evidently feels justified in breaking principles in complementary areas; for example, using the idea that it is legitimate to be forced to save.
In an alarming speech, Martin Weale [a leading expert at the Bank of England] urged Britons to wake up to the fact that their level of saving is too low and that they are spending too much. ... The top economist said people were deluding themselves about the type of retirement they could expect, unless they were happy to work ‘much later’. ...
Starting next year, new rules will force all bosses to pay into a pension for their workers for the first time, unless the worker decides to opt out. ... Pensions minister Steve Webb said ... ‘Our workplace pension reform is vital. From 2012, automatic enrolment will mean millions of people saving into a pension for the first time, with a contribution from their employer.’ (Daily Mail, 26 August)
Having one’s money confiscated is not the same as saving, even if money is also confiscated from your employer at the same time, thus surreptitiously reducing the resources which he has available to pay you directly.
If this money were not confiscated, those who wished to save in the normal sense of the word, i.e. build up their own capital, might use it to do so. Hence this legislation is reducing the possibility of savings being made.
Theoretically the money will be preserved from the irresponsible activities of those who might wish to use it for something else before reaching what the government of their day decrees to be ‘retirement age’. Possibly those who might choose to act in this way do so knowing that their family history indicates the likelihood of their dying before receiving anything in the way of retirement pay; or having decided, consciously or unconsciously, to get lost on a mountainside somewhere and die of exposure before they suffer from the drawbacks of ageing.
At a time when the national finances are under severe strain, later retirement ages for both sexes are unavoidable. ... Pension planning is a long-term undertaking that ideally should be carried out over an entire working lifetime. (Ruth Sunderland, Daily Mail, 14 October)
Later retirement ages are only ‘unavoidable’ if you rule out such possibilities as abolishing state education, child benefit at all levels of income, the NHS, etc.
And you can only plan with money that is in your own hands.
In my twenties, being deprived of the possibility of earning a living as an academic, unable to envisage earning a living in any other way, and also deprived of the possibility of income support when receiving no income from any employment, I made great efforts to ensure that I would pay the voluntary contributions into the state pension scheme. In deciding to do this, rather than to keep an equivalent amount in my own hands and invest it as best I could over the years, I was considerably influenced by the fact that the state pension was paid ‘as of right’ as a result of contributions made, and was not a ‘benefit’ supposedly related to your ‘needs’ as assessed by agents of the collective.
I paid in contributions every year over a period of about forty years, and had started to receive a disappointingly withered pension, when it was announced that state pensions would now be means-tested. Some years later it was announced that the age at which people would receive them was not what they had previously expected, but was liable to shift forward at the whim of the government.
So my attempts to ‘plan’ for my income after the age of 60 had been misguided, as I had not taken into account the possibility of retrospective legislation.