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State pension ‘unsustainable’? July 18, 2016

Posted by WorldbyStorm in Uncategorized.
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Or so says Leo Varadkar. And apparently people must ‘supplement’ it from their wages.

He told a news conference that more than half of Irish workers relied solely on the State pension and that had to be remedied.

This was an enormous multi-annual project which would involve reforming the pension landscape, he said.

But given wage levels…

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1. Jolly Red Giant - July 18, 2016

Big surprise here – force workers to pay into a private pension fund so that the pension fund managers can gamble the money on the various financial ‘instruments’ on the markets – and pay the crazy fees to run the fund.

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Gewerkschaftler - July 19, 2016

Exactly – this kind of rip-off is being pushed relentlessly in Germany despite the fact that the last attempt (the Riesterente) proved to be a complete shambles and the pensioners lost out.

I wouldn’t mind so much if they’d come up with an original scam.

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2. gendjinn - July 18, 2016

Varadkar has identified an important problem. 47% will rely solely on the state pension in retirement and the pension is insufficient.

Obviously the state pension needs to be increased to ensure that 47% of the state does not fall into poverty upon retirement.

Good catch Leo!

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Gewerkschaftler - July 19, 2016

So tax corporations and the rich adequately to pay for decent pensions. The assumption that pensions should come out of some fund dependent on the ‘confidence fairy’ is nonsense in the current capitalist environment.

Remember that Switzerland can sell 50-year bonds at negative returns – such is are the prospects of the growth of any investment fund.

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3. Gewerkschaftler - July 19, 2016

Figure on the scale of the finance rip-off in the US economy.

We found that, between 1990 and 2005, excess profits and pay amounted to $3.6–$4.2 trillion and the misallocation of human and financial resources, which lowered U.S. economic growth, cost the U.S. economy between $2.6 trillion and $3.9 trillion, all in inflation-adjusted dollars. Together, these “everyday” costs of high finance amounted to between $6.3 trillion and $8.2 trillion between 1990 and 2005.

Adding conservative estimates by the Dallas Federal Reserve Bank of the expected costs of the great financial crisis (measured from 2008 to 2023), which amount to between $6.5 trillion and $14.5 trillion, we get a total cost of between $12.9 trillion and $22.7 trillion. This amounts to between $40,000 and $70,000 for every man, woman, and child in the U.S., or between $105,000 and $184,000 for the typical American family. Without this loss, the typical American household would have doubled its wealth at retirement.

That’s one dollar in two of retirement wealth that went to the financial parasites.

From Gerald Epsteins blog post on his research here.

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gendjinn - July 19, 2016

Since 2008 all of the new wealth created went to the top 10%. The bottom 90% have lost ground, the poorer you were to start the more ground you’ve lost. At least for data in the US.

Breaking points are rapidly being approached and as can be seen in the world several countries have already snapped.

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4. 6to5against - July 19, 2016

The state pension is inadequate, and there are two obvious solutions

1. We must all pay large amounts of our income into expensive, private pension funds. The costs of these funds will almost inevitably eat up any profits, but there will still be a little left at the end due to the huge tax discount available to purchasers of these funds.
2. we all pay a little more tax/prsi and increase the state pension. In particular, employer PRSI in Ireland is more or less the lowest in Europe.

option 1 is expensive and won’t really solve the problem. We have a huge number of workers on low wages who can’t afford to pay into these funds, and who wouldn’t benefit if they did so as they don’t pay the higher rate of tax. Therefore we would still have a big problem with old age poverty.

option 2 is also expensive but incurs far less waste, as there no management fees. It would also be far more equitable, and would do a lot to alleviate old age poverty.

We are automatically rejecting option 2 because we must under no circumstances increase any form of tax. People and employers can’t afford to pay more tax.

Therefore we are left with option 1 which will cost more and be less efficient. So the same people and employers that can’t apparently afford more tax will instead have to afford more pension contributions.

But that’s OK because its not a tax.

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WorldbyStorm - July 19, 2016

+1

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5. Alibaba - July 19, 2016

Leo Varadkar says the current State pension scheme is “unsustainable” and needed to be “remedied” – meaning we’ll screw you every way we can to make you pay for the pension entitlement you’ve already paid through tax and PRSI.

This call for “reform” has happened already, for instance, delaying the old age pension age up to 67/68 years. Also, we are seeing the transforming of Combined Benefit schemes into Combined Contribution schemes – meaning that those associated with market performance could likely deliver a pittance in due course. Who in their right mind would go there unless there is an economic upsurge?

Varadkar might be looking to a new opening for private pensions or, as is much more likely, a “new retirement fund scheme”, to which workers are “automatically signed up”. He has already said it could be rolled out within a year. Rest assured, you will be told, workers would have the ability to opt out of this scheme. But if you do, perish the thought, you can live your life awaiting the diminishing of terms of current OAP entitlements in days to come.

Just look at what they have done already. Nowadays those who have made ten years of A rate credited contributions can be eligible for a State pension. Previously it was five years only. Whose to say what they will do once the new scheme is ensconced or with any new legislation forthcoming?

The oldest way I know of putting the frighteners on people is the one about the ageing population. We will be warned about crisis in state finances as people live longer with better nutrition, medical advances and so on. There are supposed to be 17,000 additional pensioners getting State pension each year. Do you believe them? I don’t. This figure is too neat for me. Let’s take this at face value, however Let’s acknowledge that the population of over 65s is due to rise and significantly. So what! So too is the young population in Ireland (unlike those in many other countries) who will be the payers via taxation of the pensions. This youthful population is not new; it’s been with us long since.

There might be incentives to encourage involvement in the new scheme. Won’t this be helpful for some workers and especially the well-paid via tax relief they can get? Two fingers to the least well-off instead.

What, I wonder, are the trade unions doing about this? As best I know, David Begg is on some Pensions Board calling for “reform” to make up for the financial shortfall. Oh, where I did I hear that before?

And finally, to give a twist to Churchill’s quote: Up with this, I will not put!

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