Pensions

Falling stocks and shares, and failing banks have wiped out 1/3 to 1/2 of the value of lts of peoples pension plans, and with the companies no longer able to afford final salary pension schemes, or employees having to put a lot more (barely affordable) sums into (even more shakier) pension schemes, it seems like the retired population of this country is heading for some very hard times.

There is of course a section of the country that won't be affected. Listening to radio4 this morning it seems that public employees are pretty much guaranteed there pensions, crash proof, bomb proof, enshrined in law, untouchable. The gov can apparently cut the state pension, but it can't touch public service pensions.

It was argued that, well fair enough, they have a modest salary, and for years of dedication to public service, etc, but it turned out that since 2000, public employee remunuration has sored in comparison with the private sector.

So, not only are public service employees better off now than people in the private sector, but they will also be better off in the future when they retire.

Also it would apear that while private pensions need pots to supply the pensioners with their pensions, public sector employees don't - their pension is paid for by future taxation. This makes the country even more in hock than it is now.

Frankly, this is just plain wrong. Obviously, I'm not a private sector employee, if I was I would be applauding the gov's efforts for rewarding my years of service and dedication to public service. But this is yet another example of the govs complete inability to take the bull by the horns, and tackle the situation now, before it flares into yet another financial crisis.

Why?

Firstly, who's going to pay for this - taxpayers of course. But in order to pay for the very generous pension payouts, taxes will need to be raised from somewhere. Guess where that would be then.

Secondly, in order to pay for it, money will have to be cut from other payouts - first place the gov will look will be the state pension - possibly not by direct cuts, but by meagre increases, leading to further hardships for the old on low pensions.

Thirdly, innovation will be utterly stifled. Why on earth would anyone want to start their own business and develop their own products and services when they are going to be taxed to the hilt, smothered in red tape, and have a retirement smothered by destitution, when the alternative would be an nice cushy job, loaded with benefits, restricted in working times, with a nice pension and retirement at the end of it.

We are going to become a nation of teachers and council workers, unless the government do something about this now.

Not likely though is it.