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January 17, 2020

Comments

Felix FitzRoy

Excellent idea.Important additional benefit, if the pension at 65 or 67 is unconditional and un-taxed for all citizens, no matter how much or little they have worked, then no one will lose out, and there is no incentive to stop working at pension age, so labour supply and tax revenue would rise as people live longer.
The state pension naturally complements a smaller universal basic income for all adults, and a job guarantee for those who cannot find work at around the minimum wage.

Iain Coleman

I wouldn't give Osborne much credit for the triple lock. It was a Lib Dem policy, which the Lib Dems prioritised in the coalition agreement, implemented by a Lib Dem minister.

Coprolite

Two important points are missing.

1 never going to happen because people who can influence views are already well provided for.

2 economics of pensions works over a time frame if at least 10 parliaments. There is a strong incentive to favour particular cohorts in any given parliament and this is unlikely to be seen as just by other cohorts.
If the state pension for current pensioners goes up both current taxpayers and pensioners who have saved privately will feel aggrieved. If it goes up for future pensioners/ current taxpayers then today's pensioners will feel put out.

There Has been absolute fury about extending the age by two years. Changing the whole basis would require principles, intelligence and perspective. S

JohnB

Excellent post. I agree with the premise, that it makes much more sense to nationalise pensions than utilities. Utilities mostly work in the private sector. You can compare and switch providers easily. You can insulate your house, or buy a more energy efficient one, to save on bills.

In comparison for most people it’s hard to impossible to switch your pension. It’s even harder to know whether it’s right to switch, or whether your current pension is best, until it’s far too late. And the fees collected by private pension providers are just rent seeking, with no economic justification.

Pensions have far more in common with health provision than utilities. As with health there is a strong case for provision to be nationalised, for all but those willing to pay over the odds for something outside state provision

Paine

The electric power
transmission grid should be socialized
Not the generators

finance insurance
and land lots
Should be socialized

Pensions are a proper sub set
of insurance

The sovereign could issue
inflation protected consoles
To zero out socially useless
Pure " financial " rents

Paine

"The logic of capitalism, however, requires that capitalist firms have sources of profits."

We can easily sublate this
Context warraneted logic
If we
Institute new systems

Privatized
Social surplus
extracted
Thru
open entry firm level enterprise
Inside market exchanges

Is hardly eternal all against all
A second state of nature so to speak

We now can immortalize firms
as well as slaughter them

This option alone
Implies
A brave new world
Self mobilizing
in the womb of society

Dipper

I'm not sure what you mean here. Do you mean that I will not be allowed to buy shares and bonds to provide me with an income in retirement because that is the job of the state? Do you mean that I will be unable to pay additional amounts into a pension pot?

I think that the state could offer itself as a pension provider. It could offer citizens a guaranteed final salary scheme pension based on contributions. I think that when many citizens see how little the state is prepared to offer in return for hard earned cash that firstly many private sector workers will look at their state-employed friends and rellies and wonder how the state can make such generous provisions for them, and secondly many state-employees may wonder what kind of incomes they could have now in return for reduced pension rights.

cjcjc

Should one not look at the (very high level of) stability of dividends rather than prices?
And it is low equity valuations rather than high equity returns which represent a higher cost of capital, ie high expected returns, though perhaps this is what you meant.

chris

@ Dipper - I'm not proposing any ban at all. I'd like to see the state pension become more generous so that there's less need for private provision,so the latter gradually withers away. I see nothing wrong with adding an earnings-related element to the basic state pension, like SERPS.

MJW

To make the idea robust it would have to be optional and done at clear arms length from the state pension and welfare. Otherwise it just becomes subsumed into the overarching policies of taxation and welfare benefits. Without clear separation you will just perpetuate some existing welfare problems such as free riding, ponzi scheme structures and political favouritism. My personal pension is ME opting to defer MY consumption now so I can consume it later, it's not the same as compulsory contributions I'm required to make towards societal welfare via taxes.

Ken Oliver

Nice to see someone reviving analytic points that were first made by the pioneers of the welfare state; the language may be different but none of yuor points would be novel to the framers of the 1911 People's Budget.

As a civil servant (not a UK one) specialising in pension and welfare policy I argued just these points to my masters for decades. The only result was to limit my own career; the prejudice for "private good, public very very bad" is just too strong, at least in the anglosphere.

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