Pensions For Immortals

by Michael Bell

Eggheads in Nottingham have told us that if we live to be 100, it will be bad news for insurance companies that have to pay our pensions.

This piece of not very earth-shattering news is wide of the mark, though.

It's certainly a fact that longevity is increasing rapidly, and ever faster than last year's estimates, and that people like pensions administrators and Goverment actuaries should start looking for new jobs as paralympic coordinators; but the answer is not far to seek.

In the extreme case, people will become immortal. It's not really in doubt; it's just a case of when, and it's obvious that such people cannot be offered pensions in the conventional sense of an annuity which is a mixture of capital and interest.

They will have to live off the returns of investment, whether that be cash, property, shares or whatever.

For most better-off older people, the State pension is already nearly irrelevant; perhaps it pays to feed the cats and for the odd evening out. But for a decent cheque every month, people know that they have to invest on a permanent basis.

A majority of people in the more advanced economies now understand that they have to provide for themselves in old age. Governments should give up the pretence that they invest pension contributions into some kind of mythical pension fund - it was never true, in any event - and compel short-sighted young people to save into approved investment schemes from the moment they leave school.

Social security contributions are nothing but a tax; if the equivalent amount of money had been invested into retirement provision by today's 65-year-olds, they would be getting three times the amount the government pays them.

The writing is now on the wall. Every year that governments hesitate simply worsens the crisis that will come, when they have to give in and stop lying to their citizens. Best to do it now!



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