Without a doubt the pension pots are empty or, in some cases worse, in considerable debt.
The current ‘credit crunch’, or recession, or if we are to be truthful and call it the worst recession in modern history since the depression which it still may eclipse if our failed politicians do not do something useful about it by trying to restructure the economy to reflect reality instead of just aiming at the financial sector.
Is it a coincidence I have often wondered that MP’s are often given lucrative work by financial institutions when they finish and we as a nation only seem to be concerned with bailing out the financial sector.
Final salary pension schemes have always been seen as the ultimate pension scheme with anyone who had one feeling secure about their future. Recently even more final salary pension schemes have been closed down, some of them not only to new members but to existing ones as well.
The media has been so busy slagging off politicians for the past few months that the big companies have taken advantage and quietly closed most of the remaining final salary pension schemes.
The extract below is from an article entitled: - The death knell for final salary pensions?
Most of the Western democracies have an ageing population, as better public health standards mean people are living longer.
New mortality assumptions have kicked away a key foundation of pensions provision, whether people work in the private or public sector, or are wholly dependent on the state.
No longer can it be assumed that there will be enough younger workers to fund retirement provisions for those who have left employment.
The 'baby boom' generation - those aged over 50 and set to retire in the next 15 years - could well come to be regarded as the pensioner aristocracy, and the last group of workers guaranteed a reasonably prosperous retirement.
Whereas the private sector is starting to confront these difficulties by adopting more realistic assumptions, the public sector is doing little to prepare itself for a frugal future. In Britain the unfunded liabilities of inflation-proofed public sector pensions are heading for the £1trillion mark. This is money that will have to be found directly from future generations of taxpayers and is not counted as part of the surging national debt.
One trillion pounds in case anyone is wondering looks like this: £1,000,000,000,000.
That is the amount, based upon the numbers of public employees who we owe pensions to today, that we will have to find when today’s public servants retire. This figure is not shown or indicated as a budgetary requirement anywhere on the national debt. There is no provision set aside for it.
This is a ticking time bomb for the future. Something needs to be done without delay but can the current government, if you still wish to call them that, be trusted to do anything about this? Personally I do not think so.
The answers are painful and neither they nor the Conservatives will wish to tackle the problem head on.
It is a fact that this is not a bill that will have to be paid all at once but with an ageing population, which includes public sector workers, and a decreasing working population combined with a higher level of benefit claimants there is only so long that this ticking time bomb can be ignored for.