I pointed out only the other day that one of the problems with inveterate modernisers is that they frequently lack any real sense of history.
Today I come across an interesting illustration of this particular point in the form of this post from Lee Gregory on the subject of pension reform.
The problems with pensions started at the end of the Second World War. Beveridge had just presented his report demanding the slaying of 5 giants (Want, disease, squalor, idleness and ignorance) and apart of these proposals was the establishment of a savings system which would put money aside for the future when one retired. Notice the one important aspect here: a savings system which would put money aside for the future! The plan was for money to be put aside by workers for when they retire. But the politicians did not do this. Instead they presented in their manifestos the establishment for pensions for all. This is not what Beveridge wanted. For Beveridge those who worked should have the pensions when they retire, those who retired could not have pensions because they had not saved money as there was no system to.
But why make this promise? In one of the most opportunistic ideas in the history of politics, the promise of pensions for all was made to get votes. The elderly are a big voting group and after the war they were targeted to win an election and pensions were the way to do it. This means that the pensions system has been based on pay now for the current retired citizens. Now we have an aging population where people are living longer, retire at the same age but adds together to lead to a decrease in the working population. The decrease in the working population means less people to pay into the pensions system, and therefore smaller pensions, unless you increase tax, but this does not solve the problem as people will continue to live longer but retire at 65; thus the work force paying into the pensions system decreases.
What? Sorry to have to ask this, but have you actually read Beveridge? I mean properly as in the actual report itself and not some third-party analysis of it.
The Beveridge report categorically does not state that ‘ those who retired could not have pensions because they had not saved money as there was no system to’ – what it actually says on pensions is:
“…in the introduction of adequate contributory pensions there must be a period of transition during which those who have not qualified for pension by contribution but are in need have their needs met by assistance pensions. National assistance is an essential subsidiary method in the whole Plan for Social Security , and the work of the Assistance Board shows that assistance subject to means test can be administered with sympathetic justice and discretion taking full account of individual circumstances. But the scope of assistance will be narrowed from the beginning and will diminish throughout the transition period for pensions. The scheme of social insurance is designed of itself when in full operation to guarantee the income needed for subsistence in all normal cases.