THERE IS A THIRD WAY:

Pensions report gives stark warning (JAMES KIRKUP, 10/13/04, The Scotsman)

THE coming pensions crisis will divide Britain into two nations, the haves and the have-nots, with Scotland hit hardest, it was predicted yesterday.

The haves will be top executives, well-paid professionals and public sector workers with well-funded schemes, who can look forward to long, comfortable retirements. The have-nots, up 12 million of them, are private sector workers on low and middle incomes who face working to 70 and beyond to avoid spending their last days in poverty.

The warning of a nation split in old age was made by Adair Turner, the head of the government’s Pensions Commission, in a report that laid bare the frightening weaknesses of our preparations for retirement.

Mr Turner, a former head of the CBI, delivered a blunt warning to millions of workers: they need to work longer and save more. The only alternatives, he said, would either be millions of pensioners living in poverty with incomes cut by 30 per cent, or tax rises equal to 10 pence in the pound. Even though Mr Turner dismissed claims that the pensions black hole could be as much as £57 billion a year, he left no doubt that millions of workers have much more to do to secure a comfortable future.

Rising lifespans and falling birthrates are combining with government taxation of private pension funds and weak stock markets to produce a nightmare scenario for future generations. The shortfall will start to bite in 15 years’ time, meaning workers in their forties have the most to do - and the shortest time in which to do it.

Surprisingly, Mr Turner has calculated that the people who stand to suffer the most are not the very lowest paid, but those on low-to-middle incomes working for private firms. The reason, he said, is that the poorest "are the group for whom the state has become and plans to become more generous".

Time to privatize the whole shebang.

Posted by Orrin Judd at October 13, 2004 8:45 AM