Problems with pensions exhibit the same concerns that drive our inability to tackle the environmental crisis and other great societal issues. We need to recognise uncomfortable truths and meaningfully support collective, cooperative approaches, economist, Stuart Astill, warns.
Talk of a pensions crisis has not gone away. While there is some optimism there is also much uncertainty about the share of the pie that any pensioner may get when, at some increasingly distant point in the future, they can retire. This is a multifaceted problem underpinned by technical issues – in pensions and in the broader economic system – as well as socio-political problems.
Pensions are often naively seen from a narrow, financial perspective with little distinction between the micro, macro and human-societal issues. Discussion about reform often seems to suggest that, were all young people wise enough to stuff a funded-style pension pot full of a goodly share of their earnings, then they will have smoothed their income over a lifetime and mitigated the risk of a reduced standard of living in their retirement. And, if everyone did the same, this could be ticked off as a job done for individuals, for the economy and for society.
Putting money into a “pension pot” in this way – a so-called “funded pension” – is often seen as a blanket solution to everyone’s income problems in later life. But it is an uncertain strategy. The uncertainty arises largely from a shrinking number of people of working age who are producing the resources to support growing numbers of people who are retired and who will retire.
If the word support sounds odd, it is a technical point, not an emotional one. And it is not specific to pensions because it falls under what I call a Global Human Logic that says:
In our world there are only resources (including people) and decisions about how we use those resources and who benefits from the fruits of that use.
This logic is the ultimate constraint: people producing goods and services are supporting everyone who consumes. This so-called support ratio