Grey sky thinking

Published on 09/09/2012 00:00

THE headline ‘Grey sky thinking’ for this excellent article is doubly apt. Not only does it fit the problem of ­escalating costs for our ageing population (at 85 years old I am one of them) but it is also appropriate to the kind of radical change of attitude to the future economy required to deal with the first-mentioned problem.

At the start of the NHS and National Insurance most young people left school at 14, and males worked, if they lived that long, until 65. Those who drew a pension lived on average for three more years. That was a working life of 56 years out of a life of 68 years. In time of sickness treatment was much less sophisticated, and much less expensive. No heart or brain surgery, hip replacements and expensive drugs.

Now the average age of starting work is probably over 20. Today’s school leavers must expect to live to 100. They may be cured of several life-threatening illnesses before requiring months or years of care. We need an entirely new set of expectations.

The scheme introduced by the Attlee government was and is one of the largest pyramid selling frauds of all time. As contributions came in they were paid out. There was and is no National Insurance Fund. So long as claimants did not live to draw a pension for more than a few years the growing number of contributors, plus the taxpayer, could make up the difference. We need now to design a scheme to fit the entirely different times in which we live.

The average person must save as much during their working lives as they are to ­receive in their retirement. This can be in the form of pension contributions, general taxation, personal savings, investments, etc. If someone works from age 20 to 80, they need to have amassed contributions of one kind or another enough to last another 20 years.

For people to save for old age there must be safe places to save in. The once reliable pension industry has been destroyed, and can only be restored by tax relief, and availability of profitable ­investments.

John Smart, Lossiemouth