Summary of January Debate on Pensions
The discussion was attended by 22 people, with a (commented upon) good mix of ages, with at least a third of the attendees under age 35.
I gave a short factual introduction to the topic, and Tony Branagan chaired the following discussion, which was free-form but very lively.
How had the "pensions problem" come about? Had previous governments failed us by not investing contributions made by taxpayers? No, not really, because the "pay as you go" system set up in 1947 prevented this - the contributions were needed to fund the pensions of the first pensioners directly.
There was a general consensus that the mix of invested (self-funded) and "pay as you go" pensions provision needed to change in favour of invested.
Led by some of the older members, there emerged a view that a large part of the pensions "problem" was that nowadays the younger generation did not have a "savings culture" and should be encouraged to save more for their pensions. There was some very lively debate about what had caused the "instant gratification" society, whether the current government's "nanny state" policies (eg the Pension Credit was widely cited as contributing to the problem) or whether state benefits in general were too generous, or whether the fault was with the failure of the education system and/or parents to "teach" a savings culture. There was some doubt about whether a "savings culture" could be taught, and there was a general consensus that the existence of the welfare state contributed to a disincentive to save in general (compared to when some members and their parents had grown up), but that obviously some welfare state was still desirable!
At this point the younger members present protested at the suggestion that it was "all their fault" (!) and that their non-saving for pensions was in some way irresponsible. It was pointed out that young people often had other valid financial priorities other than pensions, such as education and buying property, although we did agree that many younger people were not saving enough.
Proposed solutions to the pensions problem ranged from better education (although there was some doubt as to whether this could work), through the setting of rules so that banks could not make it easy for customers to get into debt, right through to the "rolling back" of the welfare state, so as to create an incentive to save and also to free up more money for pension provision. It was also suggested that easing the burden of taxation would eventually create more opportunity for individuals to save.
There were mixed feelings about compulsory savings for pensions. Some thought this was too "nanny state" an approach and others thought it was (sadly) a necessary step. It was pointed out by one of our group, who was the administrator of a large company pension scheme, that it was currently not in the interests of many companies to promote or incentivise their pension schemes to employees, and that this needed to change.
There were mixed feelings, too, about the prospect of delaying the retirement (or state pension) age, but largely the participants were positive about this as a solution (perhaps because many had already retired!). I pointed out (although not as a complaint) that a 30 year old woman today would retire 7 years later than her 60 year old mother (because of the gender equalisation and the Turner report, if implemented). But I had to concede the point that young people today tend to enter the workforce later because of gap years and spending a longer time in education, so that much of the "later retirement" effect was actually shifting the working age.
I gave a short factual introduction to the topic, and Tony Branagan chaired the following discussion, which was free-form but very lively.
How had the "pensions problem" come about? Had previous governments failed us by not investing contributions made by taxpayers? No, not really, because the "pay as you go" system set up in 1947 prevented this - the contributions were needed to fund the pensions of the first pensioners directly.
There was a general consensus that the mix of invested (self-funded) and "pay as you go" pensions provision needed to change in favour of invested.
Led by some of the older members, there emerged a view that a large part of the pensions "problem" was that nowadays the younger generation did not have a "savings culture" and should be encouraged to save more for their pensions. There was some very lively debate about what had caused the "instant gratification" society, whether the current government's "nanny state" policies (eg the Pension Credit was widely cited as contributing to the problem) or whether state benefits in general were too generous, or whether the fault was with the failure of the education system and/or parents to "teach" a savings culture. There was some doubt about whether a "savings culture" could be taught, and there was a general consensus that the existence of the welfare state contributed to a disincentive to save in general (compared to when some members and their parents had grown up), but that obviously some welfare state was still desirable!
At this point the younger members present protested at the suggestion that it was "all their fault" (!) and that their non-saving for pensions was in some way irresponsible. It was pointed out that young people often had other valid financial priorities other than pensions, such as education and buying property, although we did agree that many younger people were not saving enough.
Proposed solutions to the pensions problem ranged from better education (although there was some doubt as to whether this could work), through the setting of rules so that banks could not make it easy for customers to get into debt, right through to the "rolling back" of the welfare state, so as to create an incentive to save and also to free up more money for pension provision. It was also suggested that easing the burden of taxation would eventually create more opportunity for individuals to save.
There were mixed feelings about compulsory savings for pensions. Some thought this was too "nanny state" an approach and others thought it was (sadly) a necessary step. It was pointed out by one of our group, who was the administrator of a large company pension scheme, that it was currently not in the interests of many companies to promote or incentivise their pension schemes to employees, and that this needed to change.
There were mixed feelings, too, about the prospect of delaying the retirement (or state pension) age, but largely the participants were positive about this as a solution (perhaps because many had already retired!). I pointed out (although not as a complaint) that a 30 year old woman today would retire 7 years later than her 60 year old mother (because of the gender equalisation and the Turner report, if implemented). But I had to concede the point that young people today tend to enter the workforce later because of gap years and spending a longer time in education, so that much of the "later retirement" effect was actually shifting the working age.
posted by Helen at 5:01 PM
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