10 march 2011, pensioned off

Whilst our erstwhile peers in the emerging (or should we now call them growth) markets squirrel away savings for their old age, leading to the massive savings glut and global imbalances, the west struggles impossibly to balance turbo consumerism with something to live on in our senior years. For some generations now the gap has been bridged by state pensions and, for those in the public sector, extremely generous pension provisions justified by wages that once upon a time were lower than the private sector's. Today though public and private are increasingly shades of grey. We have known for some time that such largesse is totally unsustainable, although attempts to remedy have been slow and painful. This is because those who will pick up the bill, our children, have no vote: over the next 45 years they will pay at least 4% more in tax. As today's workers can only lose, we are all reform-blockers, resisting working longer and linking benefits more to contributions, even as the working age population is set to fall in the next decade by some 16%, and over-65s rise by some 77%. The net effect of this is large-scale wealth transfer from future generations to our own, giving them less stake in a stable future, where jobs are harder for them to get, will pay them less, and from which they will be taxed more. A former labour minister today reported on the uk side of this to a conservative government, placing the strain on working longer and everyone paying in more: sensible indeed inevitable, but politically explosive. The biggest change is from an understanding of a pension as a right, to a pension as a personal investment we need to save today for to enjoy tomorrow. It's not something a very privileged caste is going to give up easily.