Stephen Bush’s brilliant article was inspired by him sitting in on trials and discovering magistrates in their seventies, he looks at the board of the flats he’s a leaseholder of and he finds grandparent pensioners looking after children so that their children can go to work and save money on childcare. Steven is talking about a society functioning at present because by and large those in their sixties and seventies are pensioned householders with time , energy and the financial means to help out rather than work.
This generation of helpful parents are in danger of not being replaced, in Bush’s estimation.
But now even the volunteer gerontocrat is under threat. Although generation X is no less civic-minded than the baby boomers, they have worse pension provision. In the United Kingdom they are less likely to have a generous “defined benefit” pension and more likely to have a meaner “defined contribution” one — and they are also more likely to enter the final third of their life still not on the property ladder or with higher housing costs. Both these things increase the amount of time they will have to work for financial gain and will cut into the amount of time that they spend keeping the country’s civic fabric from unravelling.
This is the same argument as the Unions make for pensions to provide adequacy. This may be a liberal and middle class version, but it says the same thing.
When we give up on proper pensions and exchange pensions for pots which look good but do not last, we erode the security of a generation. There is a generation of younger people who do not have an expectation of the kind of pension that people in private DB pensions are enjoying today. What is worse, we have a class of people who work in the public sector who will have pensions while those who work in the private sector won’t.
Steven Bush has the genius to look at pensions from outside the bubble that pension people have created for themselves. He is asking questions that are deeper than whether we can increase contributions to AE’d workplace pensions and I’m with him.
His argument may sound naive to those in the bubble but it’s what those who aren’t pension people are asking
What can be done?
In the short term, the prospects for the next wave of retirees are very hard to fix in time. But one reason why the UK needs more social housing in the future is that a higher number of people will retire without being owner-occupiers.
Both the direct cost of subsidising retirees in private housing, and the indirect cost of losing out on the volunteer work of pensioners with security of tenure, are reasons to want more, cheaper housing for people at the end of their working lives. It is also why we need to do more to boost the incomes and saving habits of people at the start of their working lives — healthier occupational pensions means that millennial pensioners will be better placed to replace today’s volunteer gerontocrats than unluckier Gen X.
This is why we need to establish a whole of life pension that accrues pensions not a pension-less pot and which is paid for by employer and employee with contributions that are defined and sustainable. We need to work out what these contributions are to give people deferred pay so they too can be “civic minded pensioners” as we have today.
