The growing age difference putting all pensions in peril

THE current furore about pensions is, in my view, missing the real problem.

The retirement date, the employee contribution and the calculation of the eventual amount are all solvable items, given the will and the resources.

The dilemma is the ever-increasing length of time the pension will be paid.

A public servant retiring in the 1940s at the age of 60 would expect to draw his pension over eight years, until 68 (the life expectancy of a fit 60-year-old at that time).

His son, retiring in the 1970s, again at 60, would draw his pension until 78, a period of 18 years. His grandson, retiring in the 2000s, at 65, could be receiving his pension until 88 or beyond, a period of 23 years.

The actuarial requirements to fund such payments within the private sector are astronomical and have, in recent years, led to the abandonment, closure to new entrants, or revision of many schemes. It is likely that this trend will continue.

Following the 1971 Census, the statistics produced were analysed and the subsequent report, published in the late 1970s, revealed that when a child born in 1971 reached the state retirement age of 65, in 2036, the working population would be equalled by those in retirement.

This would mean that the contributions to the National Insurance Scheme of each employee and his employer would need to be sufficient to pay one pensioner, meaning either very large contributions for the worker or very small pensions for the pensioner.

Successive governments have ignored this statistic. If you are more than a few years away from retirement, and relying on a reasonable state pension in your old age, be afraid, be very afraid.

From: Barrie Frost, Watson’s Lane, Reighton, Filey.

THE current dispute involving public sector workers protesting at alterations to their pension entitlements and conditions appears to ignore the perilous position of many people who work in the private sector. But, there is a contradiction in who contributes to the pensions of public sector workers.

Peter Asquith-Cowen (Yorkshire Post, July 5), says teachers pay their own contributions and they do not cost the taxpayer anything. Does this apply to all public sector workers or just teachers?

Reports I have read differ from this position. They say the pension contributions made by public sector workers support only one-quarter of the pension funds which are necessary to pay their pensions as they are presently applied.

Three-quarters of the amount required has, therefore, to be made by the taxpayers. It is appreciated that both public and private sector workers are taxpayers but the latter are in far greater numbers – why should they be made to contribute to the pension fund of others when many cannot afford a pension of their own?

Those in the private sector have already had their pensions decimated and do not enjoy many of the real privileges enjoyed by public sector workers. Many have already lost their jobs, firms bankrupted, reduced pay etc.

How would public sector workers feel if those in the private sector went on strike demanding public sector workers be made to fund their pensions?

From: Colin Davies, Dodsworth Street, Darlington.

I WAS surprised by Jayne Dowle’s column (Yorkshire Post, June 30) that defended teachers for going on strike.

No mention was made of the crass mistake of striking before the conclusion of negotiations, nor the inevitability that public service pensions had to be changed – too many pensioners and too few workers to contribute; pensioners now living much longer; the old excuse for generous pensions because pay was less than in the private sector no longer applying.

Nor was there evidence of a realisation of the parlous state of our economy which dictates a realistic approach to all expenditures.

From: G Ellison, Hawthorn Avenue, Dronfield.

WHY is it that since the minimum wage was introduced under New Labour and benefits restored to 16-17-year-olds, and then European countries joined the EU, bosses and landowners all of a sudden could not find local people to do these jobs and had to go to Poland and other Eastern EU countries to get the labour?

Is it that they can’t exploit 16- and 17-year-olds on £25 a week or pay as low as £1 an hour, as they could under the last Tory government – it was the British doing these lowly-paid jobs then.