@davidb

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FionaK
view post Posted on 15/8/2014, 07:49




@davidb

There is nothing to be gained in terms of understanding if you slavishly use the buzz phrases fed to you by a neoliberal press when discussing issues like pensions

The pension scheme is NOT a Ponzi scheme (which, incidentally, is called a Pyramid scheme in British english) and has nothing in common with such a scheme.

There are certainly sensible arguments to be had as to whether one is better off in the long run with a funded scheme rather than a pay as you go model. The easy assumption that funded schemes are automatically better or safer does not stand up to much scrutiny, despite the widespread promotion of that idea: private pension schemes are funded and it is perfectly obvious that they do not produce good outcomes for their members and are very unlikely ever to do so. That is because they are run for profit by people who subscribe to the casino capital model of extracting value through investment in intangible assets with no inherent guaranteed worth. Management fees and profit through investment in property and financial instruments render them part of the problem. They involve ordinary people as part of the rentier mentality which divorces income from real productive activity, and which aligns the interests of those with no control over asset price or choice in what to invest in at all, with those who can manipulate such matters. If you believe that asset inflation is sustainable, then it is possible to argue that such schemes are of benefit: but they have risks which are unavoidable and features which leave us all at the mercy of the financial elite. We have seen where that goes

A pay as you go system is preferable in many ways, though not necessarily so: that depends on the political will which determines the design of the system. But as an example: a pay as you go system allows pensioners to share in the benefits of increased economic growth where that arises: because the share of national wealth which is paid out in pensions can be a fixed proportion of the whole or even a rising proportion: that will never happen on a pension pot model as is easily seen in the shift from defined benefits to defined contribution schemes. That shift is quite deliberately aimed at reducing pensions and there is no doubt about that. It is justified by the assertion that we have a "demographic timebomb" and cannot afford to provide for the elderly any more: this is a lie. It suits the neoliberals very well, though. And it seems to be accepted because it is so widely asserted. What it means is that we accept that we allow the elderly to starve in our streets because.... well, TINA.

Is that the kind of society you want to live in? A return to the work house and absolute poverty for those who are inevitably dependent on our society to provide a decent standard of living and dignity no matter their circumstances

This is not abstract. The consequences are clear an inevitable. There is no separate pot of money: there is only one wealth and the question of our priorities as to how it should be distributed
 
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FionaK
view post Posted on 15/8/2014, 09:19




@davidb

There is no difference between a ponzi scheme and a pyramid scheme: they are merely the american and british terms for the same thing. But it is no accident that the american term is now preferred, because the debate is entirely predicated on the analysis of the neoliberals. They are not without an agenda. In one sense it matters not what you call it, as you say. But it does matter if what you call it does not adequately describe the model and replaces explanation with a boo word which is inherently misleading. For that reason I do not think it is moot.

I am not sure what you are getting at when you say we have an insurance scheme in which the returns bear no relation to the premiums. I think you need to tease that out a bit because I don't see the point you are making.

National insurance has never been a hypothecated income tax at any stage in its existence. One may perhaps argue that its relationship to an insurance scheme is no less tangential depending on how you categorise such things, but it is also part of the neoliberal agenda to pretend that it is no different from general taxation: they believe that tax is inherently bad and so that suits them very well. It does not make it true.

As to the contributions: both employers and benficiaries do pay in so I do not understand the point you seek to make in raising Singapore. However your statement that people effectively look out for themselves is laughable if you stop to think about it. That cannot possibly work in a funded system. A working life is about 30-40 years. Assuming that one is in employment throughout and that one is prudent and well paid enough to save from the outset it is still the case that what one can save is not a percentage alone: it is an absolute amount of money. As I have said before, Say the average wage in 1970 was £30 per week and that it is £475 now. If we assume that the amount required to meet current expenditure is 80% in both cases (not very realistic as it is far too high, but it serves) then a very prudent person in 1970 could save £6 per week. £312 per year. If all else remains equal (which it doesn't but let that pass), and assuming interest at an average of 2% on savings throughout, and inflation at 7.34%, then total savings over a lifetime of work are £88,139. If you change the interest/return to 5% it results in savings of £139,424. It bears no relation at all to what is need to keep you in old age: and it cannot. What it means in practice is that if you live 15 years after retirement you can spend 15% of average income each year on the 2% assumption: and about 30% on the 5% assumption. Which is poverty by anybody's standards.

The actual amount you can save in the early years cannot increase enough because, whatever inflation does, interest rates and returns on savings are not high enough over the whole period, and saved wealth is taxed by inflation. The rate of interest/return can vary and be higher than that: but the fact is that low levels of saving get low returns. I used 20% savings because that is close to the level of income tax in this country: so that is the amount one can reasonably expect if that tax is reduced by 20%, as neoliberals propose.

There are other scenarios but I do not think this one implausible. And that is why the surface plausibility of saving directly for old age is not necessarily superior to pay as you go. The reason we are told that it is is because there is a great deal of profit to be made by private management of pension funds. They are not necessarily a good basis for a state pension, even in principle.

You are correct to say that independence is not aligned on left or right in the crude sense. But for me it is absolutely about the kind of society I want to live in and that is a society which retains the values of the post war consensus which represented goals and aspirations shared by right and left alike: the argument was not about what we wished to achieve but rather in how best to achieve it. That is no longer true. Neoliberals do not want a more equal society: quite the opposite. If you want to live in a society where people cannot afford to eat or to call a doctor despite the fact that we have great wealth and no need for absolute poverty and misery for many then I suggest that you are better voting no, at least on those issues: for that is the unambiguous aim of our neoliberals.

That is not where I wish to live and for me we can make different choices if we vote yes: that is what this is about for me: I am tired of living with the shame of abject poverty for the many
 
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1 replies since 15/8/2014, 07:49   154 views
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