Civitas Blog

The initial response of Gordon Brown to the recommendations of the Turner report: that the provisions were unaffordable, should, in my view, be taken with a large pinch of salt. I would not trust the arithmetic of the Treasury in any matter in which they have a departmental philosophy to protect.

It has long been my concern that the nation's accounts are not sufficiently subject to public scrutiny. A careful analysis of the country's income and expenditure BY AN INDEPENDENT AUDITOR would I feel sure reveal some interesting facts. Financial management is strongly influenced by the personal agenda of those in whose hands it lies.

I cannot prove it, of course, but I would be most surprised if a different management team wouldn't come up with enormous savings that could be diverted to the personal philosophies of that different team.

It is from this reasoning that I remain unconvinced that the present pension crisis could not be solved by placing a different emphasis on the detail of the nation's budget.

Having said that, I am of the opinion that individuals should be compelled to provide for their retirement years by the imposition of a compulsory contributory pension scheme funded by both employee and employer in equal parts. I am not impressed by the cries from employers that this would cost them too much; they are continually faced with rising costs which they always manage to accommodate.

You ask the question: Is Compulsion Necessary? I agree with your opening comment that too many people don't bother to save for their retirement because they know the Government will bail them out. I will deal with your objections one by one.

1) A properly constructed scheme would provide for everyone to be included and this would, indeed, require Government to maintain a role. What is wrong with that?

2) Compulsion would not replace individual effort, nor would it prevent entrepreneurs from continuing to aim for personal wealth that would further enhance their retirement years.

3) I just do not agree with these comments being valid. Certainly a compulsory scheme would provide that the pension fund be transferrable from employment to employment. In the same way that my comments in 2) above are valid, they would also apply here to what you refer to as "changing circumstances". Any well structured scheme would be sufficiently flexible to meet those changing circumstances.

4) See comments fo 2) and 3) above.

5) I have personal experience of the introduction of a compulsory pension scheme and it certainly didn't prevent a great number of insurance companies from entering the field and thereby creating a highly competitive market.

6) Your description of how such a scheme might operate is very arguable. There are many different ways of investing the funding and the individual would be free to choose and given extensive advice. Your estimate of the charges likely to made by the insurers is quite ridiculous based on my own experience: one and a half to two percent is the more likely range.

As far as cost is concerned, Government's role as a regulator and safety net must surely be far less than the current pensions bill.

If Government is determined to continue with a national pension scheme in roughly the present form, then it must surely do something about the totally indefensible preferred treatment enjoyed by public service employees. But what Government is prepared to grasp that nettle? Going private is the only way any Government may find to get out of that mess!

(I have just looked at the preview of my message and note that my careful paragraphing has been totally ignored. I am disappointed that you place so little importance upon good grammar!)

One of the biggest drain on the amount paid out is the red tape and bureaucracy associated with every stage of the process.

There are 4 systems which absorb cash - the tax collection system, and from the Department of Work and Pensions, "Contributions Branch" (which records the NI Contributions to prove entitlement to benefits), Pensions Branch (which determines how much you will receive and pays the cash) and then another section which assesses and pays out additional benefit for those people whose income falls below their needs.

All this takes a vast army of Civil Servants which need to be paid, housed in offices etc.

Abolishing all except the tax collecting departments and paying a flat rate pension would free up a massive amount of cash to fund this.

Will it happen?

With a burgeoning army of civil servants with the vote, what do you think? The Scotsman newspaper (link here http://news.scotsman.com/index.cfm?id=2061452005) which can hardly be considered critical of Scotland and the socialist paradise north of the border states that in some areas of Scotland, 3 out of 4 people work for the State.

You might as well try to persuade the turkeys to vote for Christmas as to threaten the jobs of these oh so essential public servants by changing the existing system - and I'm willing to bet hard cash that nothing will happen.