Past politicians shirked pensions reform and we have to pay the bill
Our pensions system is a mess. Not the sort of mess that the rest of the public finances are in, that a few years of painful cuts and taxes will sort out.
No, this is much worse. We have a system designed for a bygone age of shorter lifespans, constructed on fraudulent economics, that punishes savers and cushions the feckless.
Most outrageously, generations of politicians have postponed reform by writing post-dated cheques that their children and grandchildren are supposed to honour.
Ten million Britons are aged over 65. By 2050, that number will grow to 19 million. The fastest growing age group is, believe it or not, centenarians — in 50 years there will be 350,000 of them compared with about 10,000 today.
Already some 65 per cent of welfare benefits (about £100 billion) goes to people over working age and the cost is rocketing. Each extra million pensioners will cost the country £10 billion.
When 65 was chosen as the pension age in 1926, the year of the General Strike, three in five men dropped dead before they were old enough to retire. The Grim Reaper kept claims from exceeding contributions.
Today, however, men live to 77.4 years on average, and women to 81.6. If the pension age had risen in line with life expectancy, it would now be 75.
Previous generations grew up in the belief they had "paid into the system" and would be looked after. They had been lied to. They had in fact paid in only just enough to look after the small number of pensioners at the time, but did not set aside enough to cover their own much longer and more numerous retirements.
Political leaders knew this would happen but crossed fingers that their children would be wealthy enough to pay.
The same unfunded Ponzi scheme was taken to exaggerated extremes in the public sector, where a trillion-pound black hole lurks in gilt-edged pension funds.
At the same time, many with modest private pensions find they are no better off because of means testing, compared with others who saved nothing.
The good news is that we are all living longer and healthier lives. But someone, sometime has to pay the bills.
