All too often politicians, economists and even worthy committees inform us that the state will not be able to afford to pay pensions in the future. The individual must make his / her own provision.

It is argued that this situation has the beneficial effect of making the individual work hard and profitably and encourage that person to put enough funds into reserve rather than to spend all the available money in short term personal benefit.

This has a whole variety of problems, however. Is the hard and profitable work fair or excessive? Are excessive hours worked, so that family at critical times receive too little of the quality time of the earner, the earner having not only spent excessive time working but also perhaps in travelling to work or putting too much mental effort in so that too little is left when he returns home?

The whole matter of “fair reward” is commented upon in other papers.

However if one concentrates on maximising income to allow high surplus funds for saving, then has the earner given sufficient to society in “voluntary” matters – helping with youth football training, being on school PTAs, organising events for the Macmillan fund, acting as treasurer to some town-beautifying organisation?

To put it bluntly: should encouragement be given for one to neglect others and the wider society simply to maximise one’s own comfort in old age?

The second point that needs challenging is that is bad to fail to save a sufficient portion of one’s income.

Now it is surely self-evident that the childless couple should be able to save more than those with children. The logic of those who argue for maximising personal reserves is then that children should be avoided. But who will then be around to be the workers in future generations?

[To avoid misunderstanding: some of the very nicest people neither have children nor are they driven by the desire to save or make money.]

So should the main determinant on available funds in our old age be based simply those we have privately saved up, whatever the cost to family and society?  This is the heart of ethical-economics consideration.

But further: where does the actual money to pay out pensions come from? Is there a mystical cake, which is available with ever-flowing funds marked “institutions”? Or is there just one cake available for funds from which pensions are paid: largely being paid by current consumption, but the decision on how to share this cake between state and “private” pensions is simply a political matter?

For example: a shopping centre was owned by the state: rents for the shops, the “overheads” built into pricing, were duly determined, presumably for the public good. But then it was sold off to a pension fund: whose statutory duty is not to the public interest or the public good but to maximise income for its members.

Let us be quite clear: savings in pensions etc are worth nothing unless there is money around to take over those savings. Imagine someone has put £100,000 over many years into the purchase of gold bullion: but then earnings drop to such an extent that there is simply no available money to buy such “luxuries”. The £100,000 becomes worthless.

The gold bullion (i.e. the pension) are only of value if at the time the pension is to be paid out there are those people available to purchase the item.

Hence the important thing in the provision of pensions is surely not the past activities of the pensioner but the earning power of the generations around when the pensions are being paid out.

Once again, there seems that very little thought has gone into formulating current pension ideas.

(to be continued)