The Adair Turner Report on pension provision is important.  Although it takes up no policy stance, it has raised the political profile of the issue. Nobody could treat me now, as Alistair Darling did, in 1997.  And it is obviously "politic" for the Government to kick the policy issue into the long grass of the next Parliament, following the 2005 Election.  But I remain concerned, in spite of all the commentary and public exposure, that my particular arguments are not being canvassed.

• I remain committed to a much higher, though deferred, State pension. I say: £160 per week at 70.  Payable to each individual, without marriage abatement.  I would retain the contributory principle, effectively enacted. And I would extend the range of National Savings, developing the role of the State in the conventional savings business, offering sensible guaranteed returns, as National Savings do already.

My reasoning is not that of the CBI, who simply want people to worker harder and make fewer demands upon the communal pot of wealth.  I say that, by casting the State as the long-stop guarantor of a decent old age pension, I have got my priorities right.  This is my argument.

Central to the unique UK pensions crisis is the collapse of the private "capitalist" sector.  Other EU states have pensions crises too, but they are quite different in character.  For the UK, the inadequacies of State pension provision has been historically concealed by the success of the City of London and the capitalist enterprise of its institutions.  Both company pensions and private portable pensions have thrived, and removed the sting of poverty from millions of older people.

That era has finished.  The high returns-on-capital which formerly characterised London, at the very heart of Empire, have gone for ever. Capitalist institutions have now shown themselves incapable of meeting the demands of "tail-end" pensions provision - that is, the guarantee of payment right up to the end of life, a tryst with fate that is constantly receding into the distance, and will continue to recede.  Capitalist reasoning may be capable of meeting finite, known, insurance requirements; but it cannot give to long-livers the guarantee of lifetime support - "until Death do us part".

The truth is that only the community itself (i.e. the State, which never dies) can do that.  I say that the private sector should stay out of tail-end insurance altogether, and leave it to the State.  This is the right time for some robust socialist reasoning, and a firm rejection of defective capitalist institutions.  It is for the State (i.e. you and me) to work out how best to meet that commitment.  And I say that, if we chose the age of 70 as the trigger for that £160-per-week commitment, we would be realistic.

At younger ages, those who were too ill or weak to work, or for whom there were no jobs, would continue to receive means-tested benefits, at the equivalent of the present £105-per-week.  They would be no worse off, therefore, than present pensioners, although that "interim" phase would last longer than at present, reflecting the reality of longer lives.  But such a system would have another, very important, market consequence.

The private sector would have a powerful motive to offer "one-year" early retirement packages - e.g. for the right to retire at 69 at £160-per-week, anticipating the State pension by one year, savers could by a specific, dedicated pension product.  And the State should be willing to "disregard" such dedicated savings, in operating the £105 Means Test.  Saving for "early" retirement, in the private market, would thus become worthwhile: savers would be secure in the knowledge that they would enjoy the fruits of their saving in addition to the State's £105 minimum.  Some pensioners would be able to save for three or four or five years' "early retirement", knowing that they could switch to the State Old Age Pension at 70.

What is missing from the debate is any awareness of this switch of role, withdrawing the private sector from the unpredictable "tail-end" sector, and committing the resources of the State precisely to that long-stop role, which only the State can fill.

Where to YOU stand on this Big Issue?  Drop me a line

1035  1 November 2004  

It is costing Britain and Europe a fortune dealing with these situations. Has any thought been given to spending this money better, by giving it to other countries to take these people? Not everyone has to go to one place. I am sure that many places would welcome an influx of new people and the money they bring. I am not only thinking of Australia here. Above all, what the asylum seekers want is to not be sent back whence they came. This would be the ‘end of the world’ for these people. Who can blame them?

Britain must be careful for her reputation. Just letting bureaucrats have their head, as if they were dealing with criminals at the Hague, will not be good for the self image of the British people, when they recover from this silly xenophobia. The best solution is to let them come. Their children and grandchildren will keep British business humming, and their DNA will renew the current stock.  

Best regards, Mike Davis   

Mike  It always great to have your ideas, keep them coming!  This is my response... Roger