Politics

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Johnny Blaze
Johnny Blaze
Nov 2022
1:46pm, 18 Nov 2022
28,915 posts
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Johnny Blaze
Martin Lewis:
"We are all asked to pay into the National Insurance system on the promise that it will help protect us and provide a pension (amongst other things). Yet rather than actually put the money aside, it isn’t hypothecated, it just goes into the general pot of taxation.

When we actually get our pension it comes out of other, newer taxpayers’ contributions, rather than any money actually put aside to pay for us in our old age. We are made to believe it works because the state pension continues to pay out, rather than by any sound fundamentals.

Like a ponzi scheme, the system will continue to work until there are too many existing members to be funded by the new ones. In our case the problem will be a gradually ageing population. Worrying thought, yet frankly it’s still the best and only system we’ve got, so it’s no surprise, past, present and probably future governments will stick with it."

So Fozzy has a point.

*pinches self*
Johnny Blaze
Johnny Blaze
Nov 2022
1:46pm, 18 Nov 2022
28,916 posts
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Johnny Blaze
Which also kind of feeds into the observation that our state pension is pitiful...
rf_fozzy
rf_fozzy
Nov 2022
1:49pm, 18 Nov 2022
18,769 posts
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rf_fozzy
The state pension is paid for by tax revenue in the current fiscal year.

I.e. Tax payers now are paying for state pensioners now.

When it was brought in, there were 10 people of working age to 1 pensioner.

Now there are 3-4 people of working age to 1 pensioner.

By the time I am due to retire, it'll be close to 1 to 1.

It's remarkably close to a ponzi scheme.
Bazoaxe
Bazoaxe
Nov 2022
1:50pm, 18 Nov 2022
23,944 posts
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Bazoaxe
I agree state pension had the feel and risks of a Ponzi scheme about it. None of it is guaranteed and can change if a government so wishes even if you have paid for 40 years.

If the NI had been set aside into individual pots that would be better but then it would be unequal based on earnings and thus nI cohtributions
rf_fozzy
rf_fozzy
Nov 2022
1:52pm, 18 Nov 2022
18,770 posts
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rf_fozzy
I am suspicious about how private pension schemes will perform as the ageing population ratio reduces too.

We've already seen a number of schemes collapse of course.

And any increases to private pensions is likely to drive down current incomes surely?
rf_fozzy
rf_fozzy
Nov 2022
1:54pm, 18 Nov 2022
18,771 posts
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rf_fozzy
But we've had this debate before.
Johnny Blaze
Johnny Blaze
Nov 2022
1:55pm, 18 Nov 2022
28,917 posts
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Johnny Blaze
researchbriefings.files.parliament.uk

At first sight the UK seems to perform badly on pensions, but on the assessment run on page 17 of this, we get a "B" grade overall. Which doesn't seem that bad.
rf_fozzy
rf_fozzy
Nov 2022
1:57pm, 18 Nov 2022
18,772 posts
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rf_fozzy
Looks like Twitter might collapse soon too.

Strangely, not too many employees are enthralled by Musk's offer of work more hours for less money at a higher intensity plan.

The man is an idiot.

I've no idea why so many see him as an idol.
Johnny Blaze
Johnny Blaze
Nov 2022
1:58pm, 18 Nov 2022
28,918 posts
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Johnny Blaze
He's really making a mess of things, innit. The amount of good stuff he could have done with $44Bn and he is just pissing it all up against the wall.
Cerrertonia
Cerrertonia
Nov 2022
2:02pm, 18 Nov 2022
17,918 posts
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Cerrertonia
I agree state pension had the feel and risks of a Ponzi scheme about it. None of it is guaranteed and can change if a government so wishes even if you have paid for 40 years.
But that is really no different to any other form of savings. The government can and does slowly confiscate savers' money through inflation, it can take money directly out of pension funds through tax changes as Gordon Brown did, it can bring the whole industry to near bankruptcy through policy errors, as Liz Truss & Kwasi Kwarteng did.

As a thought experiment - if the government were to take NI contributions and store them away or invest them somewhere to be paid back in however many years time, how would that change things? If the government did away with national insurance completely and continued to pay pensions out of general taxation, how would that change things?

It's not a Ponzi scheme precisely because the UK government is able to create any amount of money it likes.

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