I normally find John Winful’s contributions erudite and interesting but was confused by his recent contribution on pension compulsion.He asserts that there are very few people who have started their own pension policy by design. I do not know where he works or the type of clients he attracts but I can assure you in my practice it is the majority and the norm, not the exception. He then jumps to the conclusion that compulsion is the only solution. Heaven forbid! We have had compulsory pensions for a long time together with compulsory health insurance – it is called National Insurance or that is what it is purported to fund. A compulsory pension will be nothing more than a further tax. He does address the issue of tax but I do not follow the argument that just because the Government has introduced 80 different types of taxes, one of these could have been suborned and used as pension funding instead. To where – the private sector, the public sector? Do not forget that taxation is levied in proportion to means, which means that those who are better off will have better pensions than those that are worse off, which is what we have now anyway. What about means-tested benefits and minimum income guarantees? He seems to have ignored this particular impasse. This aspect is exercising many pension minds at present. How do you enforce compulsion if contributions are to be made to the private sector? Enforcement of stakeholder cannot be considered a conspicuous success. What of the self-employed and the ever growing numbers in the black economy? How would compulsion affect people who already have a pension? It seems a bit hard that, with all the taxes we have at present, to decide that at least 5 per cent if not more of somebody’s income is going to by siphoned off on a compulsory pension, particularly when these people happen to be recent graduates with 30,000 worth of debt, a big mortgage that they are struggling to pay off and probably unsecured loans as well. He is more on the right track when he says this Government is maladroit and incompetent in pension matters and should have left things alone from the beginning. The pension crisis, such as it is, seems to be mainly confined to those on lower incomes or those with big debts. Resolving the problem for these sectors will ultimately, in my view, hinge on having a competent and honest Government which will, out of general taxation, provide a decent and living pension for those who have worked long enough to deserve one. This means that waste in other sectors would have to be avoided. One can immediately think of unfulfilled computer commitments, a daft involvement in a war, by its own admission the extra huge funding to the NHS has not produced anything like the desired outcome, and so forth. All this is unlikely to materialise from any political party. We sneer at our neighbours in Europe for their unfunded liabilities but at least these liabilities are also for the general populace and not the burden that we have for the unfunded liabilities for our civil and public servants and MPs where the figures are constantly obfuscated so this liability remains hidden. If there was a levelling between public and private sector state benefits much of the current problems could be resolved. Harry Katz is principal of Norwest Consultants
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