The think tank, International Longevity Centre UK produced a report this month entitled The UK and other ageing populations will have to increase their state pension age to 71 by 2050 to maintain the number of workers per retiree. Once again, an organisation, purporting to be an innovator of policy and influencer of the future societal makeup of the UK, is guilty of conforming rigidly to orthodox frames. As far as new and useful ideas are concerned, this tank is so low on fuel that it is running on fumes.
Had the authors considered the blatant logic of the position of the UK government as monopoly issuer of the pound, they would realise that finding the pounds is never an issue. Taxable earnings are not required to build a pension fund. In the modern fiat money system, governments create currency by spending it into existence in many forms. One of the major expenditures for the UK treasury is pension payments.
Society has decreed that once a certain age is reached, there is no longer an expectation for the citizen to work. The individual is rewarded for 40-50 years of work necessary for the upkeep of society’s infrastructure and services. In doing so, the individual earns wages to afford a decent standard of living and to pay tax liabilities. The award for this sacrifice to the community is being provided with the income to sustain a comfortable lifestyle through the remainder of life.
False framing of pension funds
By linking pensions to the taxes produced through workers’ earnings, a false constraint is thrown up to obfuscate the logical view that pension provision can be whatever it is required to be to meet the needs of pensioners. There is no financial limit to what the government can ‘afford’ in terms of GBP. The link to taxation is a false frame.
This erroneous thinking on pensions has real-life implications. A decision to change the age of pension provision for UK women with little warning resulted in the disruption of carefully considered life and retirement plans for these women and their families. There are many cases where these people have passed away before receiving any of the pension payments they were entitled to. The women and their families are told this is an economic necessity when it is no such thing. This is a political choice driven purely by ideology.
Resources of primary importance
This is not to say that the proportion of workers to retirees is not important in any way. Problems could arise from the supply side. There must be enough working age people to carry out the work required to ensure living standards stay at adequate levels. Our pensioners will require health care, and possibly elder care.
They certainly need healthy food, clean water, sanitation, public transport, well-insulated housing and a sense of law and order in the community. There must be enough staff and service providers to sustain these essential needs. No amount of pension provision can purchase goods or services that are not available to buy.
Work smarter not harder
The outlook is not as bleak as the authors make out. Targeted productivity increases can mitigate the staffing issues. Developing robotics and automated instruments to replace the more mundane tasks in society can free up workers to concentrate investment and training on jobs where human input is essential.
Advancements in technology have repeatedly rendered human input redundant since the Industrial Revolution. The demand for growth, however, and profit from capitalists through political ideology has meant that workers’ wages stagnate, hours increase, and conditions reduce as shareholders and directors seek and hoard ever-growing remuneration.
Wars and domestic austerity through financial colonialism ensure a regular stream of immigrants to the nations at the peak of the investment pyramid. The nations at the pinnacle, largely the European colonists and the sphere of influence controlled by them since the 19th century, were joined by Middle Eastern oil states in the 1970s.
One of the biggest impacts to the UK of leaving the European Union has been the loss of freedom of movement for civilians across the union borders and hence, this stream of immigration. To protect the living standards of future generations of pensioners, the UK government must either increase immigration once more or encourage a ‘baby-boom.’ The inconsistency of UK government policy is highlighted here by the insistence on lowering migration while ignoring the plight of our young people.
It’s not just pension-aged people, young Brits need support too
Current UK policy couldn’t be further from providing young Brits with the security and leisure to start building families in their twenties. With rising house prices and surging food and energy bills, many young people today are stressed and find it difficult to plan a life strategy in the UK. Many divert attention to plans for emigration or sink into nihilism and despair, neither of which is a good outcome for these individuals, our pensioners, or society in general.
We require a political party (or think tank) to offer to shake the etch-a-sketch and provide a vision that truly investigates outside the box. As a nation we must take our foot off the gas and forget the ‘growth and profit at all costs’ mentality. We can work less, but more effectively, free up young couples to concentrate on family advancement as their contribution to the good society. If we allow young couples the opportunity to divide the responsibilities for work and childcare, where over the course of a month each has contributed an equal time to both sectors of life, a far better work/life balance is available.
At the other end of life, care within the family and networked community should be considered optimal too. The break-up of communities during the Thatcher years is, in my opinion, largely responsible for the crisis in care we find ourselves in today. Whether through immigration or domestic redistribution, the centralisation of investment has disintegrated traditional networks of neighbourly and familial care that have never been resolved.
A multitude of potential pathways
There are scenarios available where imposed work is such a small part of our lives that we never really retire from playing our part in the day-to-day functioning of society. As citizens we could contribute what we are required to do to sustain an agreed minimum standard of living for our local community and what is required from each of us for the nation.
With the continuous development of technology, it is possible to envisage necessary working time to be equivalent to two days per week. In this scenario, ‘work’ could be distributed by age and ability, and our personal skill-base would be multi-faceted, able to perform multiple essential services to an adequate standard. We would all contribute what we could for local society from our adolescence to our elder years.
Whatever route the nation decides to follow, taxpayers’ money is not required for, and will never constrain, the state pension the government can afford to provide. Welfare payments should always match the amount required to provide an agreed minimum standard of living to all eligible members of society whatever age the electorate decides is appropriate.
Many prominent think tanks seem to function as a method of manipulating and constraining public opinion on the potential development of society. To disprove this assumption these organisations should widen the net in search of the widest variety of insight and innovative ideas by including heterodox economic advisors.
Alternatively, they could come clean and admit that these reports are merely an attempt to justify the status quo and gaslight the public into accepting a lack of alternative, no matter how reluctantly, and agreeing to policy decisions that are akin to turkeys voting for Christmas.
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