Pete Draper is right to draw attention to the inequity inherent in pension legislation. The abuse of this legislation increases the amount of tax that the rest of us have to pay. Income in retirement is important for individuals and to the state because if individuals fail to provide the equivalent of a living wage then the burden to support them will fall upon the state. Given our demographic profile it is a temptation to suggest the cost will be unsustainable; but it will have to be sustained.
We all know what workers in the private sector want. They want the sort of pensions the MPs vote for themselves, or provide for civil servants, or the final salary schemes companies used to provide. They want certainty. They are given uncertainty. They are asked to gamble a large part of their income on the performance of investments, the uncertain level of annuity that their savings would achieve and the propriety of the companies selling annuities. Recent results show that those who gambled lost.
Clearly what is missing is some body willing and able to give guarantees. Only the state could do this; but they only offer the new form of gambling promoted in the Queen’s speech.
The state could and should provide a pension policy with guaranteed, inflation linked growth and guaranteed annuity levels. This is what better final salaries schemes did; if they could surely the state can. The justifiable purpose would be encourage individuals to avoid the need for state relief; to avoid abuse benefit should be capped at say 150% of average pay.
An advantage would be that it could also be used for all new entrants into public service eliminating the conflict between private and public employees. It could even be used for MPs ; but now I’m dreaming; which MP would vote for that!