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Work Until You Drop

David Green, 12 October 2004

The independent commission, chaired by Adair Turner, has warned of the need for pension reform. Some groups are demanding an increase in the basic pension at the taxpayer’s expense, others an end to means testing, and a few are calling for raising the pension age.
A basic safety net is a necessity, but if we want to remain a free people and to enjoy independence in old age, the best safeguard is to rely on self-help: save as much as you can during your working life and ‘work until you drop’. Further discussion.

5 comments on “Work Until You Drop”

  1. I know very little about the scheme in Bermuda and, therefore, I can’t argue against the view that it worked perfectly well. Moreover, the danger that some people will neglect to provide for their old age has always been the strongest argument for compulsion. For this reason, it may be legitimate to require everyone to provide for a pension sufficient (but no more) to prevent them from needing to claim benefit in retirement. The danger is that such a scheme could be extended beyond the minimum necessary to avoid free riding.

  2. David, I can’t begin to challenge your arguments individually. I can only say that it is my conviction that individuals will NOT deal with the problem of their retirement years and their careless attitude will bring them misery in their old age and resort to a somewhat arbitrary hand out from charity.
    In the absence of any ability to challenge your philosophy on the basis of any exposure to any form of data, I bow to your far superior experience in the field but reserve my judgement based on my own experience. Does that make any sense?

  3. The role of the government should be to protect people from hardship when they get into difficulty. If the government forces us to provide for a contingency like old age in a particular way, then it suppresses the invention of alternatives that might be better for everyone. Here are a few arguments against compulsion drawn from historical experience.

  4. I am usually in agreement with the ideas and publications that emanate from Civitas but I have to say that I disagree strongly with the arguments advanced in this pamphlet.
    The arguments used to dismiss the benefits of enforced saving range from weak to laughable. People paying into a private pension fund would not miss the contributions any more than they miss the amounts deducted for income tax or national insurance.
    Until a few years ago I lived in tiny Bermuda where they experienced the same problem of declining funds for their government pension. The sensible provision of private pension funding was introduced with no fuss and no bother. All parties endorsed it and it happened and everyone is happy with it.
    The pensions are portable in that an employee takes it from employment to employment. Obviously periods of unemployment will result in a lower final pension and the Bermuda Government sensibly retains a role to ensure that minimum standards are achieved.
    The Bermuda system allows employees some control over how their funds are invested but they receive professional advice on the risks attached to some investment opportunities.
    It is untrue to say that there is a closed market as tiny Bermuda has at least half a dozen insurance companies competing for the business which ensures that they are very competitive.
    I think that the idea of “working until you drop” is very sad.
    I might add that withdrawal from the EU would immediately provide funds to cover the government shortfall which has caused the current debate!

  5. It seems to me that the pensions problem could be solved easily enough by the simple expedient of withdrawal from the EU – enabling a saving of up to £40 billion p.a. which could then be devoted to increasing the national pension without the need for additional taxation.
    What about reversing Gordon Brown’s taxation policy? That would help.

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