As it is unlikely that I will ever run for any kind of public office and it is even more unlikely I will ever be asked to run, I am in a glorious position of being able to make bold and un-electable statements. So I am going to take this opportunity to say a few words about pensions.
In my young twenties, deep in the last century, I was in conversation with a friend and she was talking about retirement. The job she was looking for was all about how soon and how much pension she might earn. Tragically she died before her 50th birthday and I will never know whether she had achieved her pension goals. However, early retirement is something of the past generation and it is going to increasingly haunt this and future generations.
There are several problems which will play havoc for our children and grand children. We have all heard about this thing called the environment, and then there is overpopulation, there will be water shortages but everything will be fine on the energy front, I am told by various energy experts. Gas is shaken out of the ground and into your boilers and cars, solve our debt crisis, but not our pension crisis. That fracking gas is being replaced by our collective heads going ever deeper into our earthly substructure as we ignore the continually increasing pensions crisis.
For the second time in my working life in the UK I am having to deal with a pension fund which is not simply underfunded, but largely due to the crass stupidity of successive governments only matched by the stupidity of the pension fund managers, it is in rapidly escalating crisis. I first became aware of how daft pension fund managers are in the early 90s when the pension managers of my then company were well on the way to bankrupting our pension fund and they did not even seem to realise it. They certainly did not care so long as they followed the b….y regulations. Who needs a brain when you have regulations?
I was able to stop a run on the pension fund, but no thanks, help, let alone compensation for stupidity to date on the part of the pension fund managers. The action I took independently later became law, but no doubt for many that was too late. To add insult to injury, it was not even a fund I was a member of. I had simply been told (and what did I know) that as a Director of this company I should also be a Trustee of the pension fund – big mistake!So now we have the next crisis. Governments have forced pension funds to invest in ‘safe’ gilts, which are practically worthless, but are great to prop up banks (I will never understand why we did not simply let a few more banks go – get the pain over and regroup, rather than this torturous process – there went my political career) and pay no interest. In the meantime people live longer (who said the NHS was not doing a good job?) despite best efforts to drink, smoke and eat ourselves to death, so pensions have to be paid longer. The gap is growing. Its not rocket science, but the pension funds will charge you a king’s ransom to tell you this.There are many companies out there and probably as many charities, who are what are termed ‘pension zombies’. They exist solely for the purpose of sustaining the pension fund and the hole grows by the day. I have read all kinds of numbers estimating how deep this hole might be, but one thing is clear: the HS2 combined with all the fracking we can do and the money pumped into the banks put together will pale into insignificance compared to the pensions crisis. The figures today hides the mother of all holes: the state pension paid to us all and the pensions paid to most government employees, because these have one added problem – the future generation always pays, so there are zero assets covering these ever increasing future liabilities.We have some choices to make and of course we are making the populist one, mainly because politicians, unlike me, want to get reelected or elected in the first place. Using the much proven method of ‘apres moi la deluge’ which freely translates into, ‘I don’t give a s..t because it will not happen until after I have retired’, we all simply moan about it and tweak the edges. Yet the solution is so clear and equally unappetising. It is even less attractive politically than it was to let the banks fail, but it is very clear that if there had been no bank bailouts, we would now be out of the recession and not just celebrating a Scottish win at Wimbledon.
The solution to this mother of all financial crises is to increase the retirement age for everyone to say 75 effective immediately. My guess, and no I have not done the calculations, is that this would put every single pension fund into an excess position, release billions into the economy, solve the debt crisis, the government debt, the bank balance sheets and make the whole nation miserable, all in one fell swoop. What a great day!
PS the unemployment figures would briefly skyrocket as millions of additional people suddenly need work, but I am sure Vince Cable can create another million private sector jobs. Vince? Where are those million jobs exactly?