This is a good place to take a step back and ask some serious questions, like how we can pay pensions to people who don’t pay income tax or national insurance. What if they do not declare earnings. What is legitimate work  that earns a pension?

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There are of course people who earn in the black economy too. There are people who do not declare their earnings so as not to pay tax or national insurance. Often earnings are semi legitimate and some times simply criminal.

The idea of linking pensions to declared earnings is to link it to legitimate earnings. It is possible to be in earnings related workplace  pensions and to pay no tax (the low paid pension payment), it is not possible to earn a lot of money, not declare it and get paid a pension through a contractual or occupational pension scheme

What needs to improve isn’t the money but what the money purchases. In the old days we had a State “earnings related” state pension where the pension allocated was linked to national insurance paid. It was something that you opted out of when you went self employed and din’t pay the national insurance payments that in return paid extra state pension.

What I think Johan is getting to is that there must be a different kind of earnings which earns pensions. Perhaps the Pension Commission will, like Barbara Castle decide that employment is still one way to earn pension and self-employment another. But where I think the nation would draw a line is in paying  pensions to those who have no declared pensions as this is an incentive to do nothing or (worse) work in the black economy.

There may be a “grey” economy that is recognised not for “earnings” but for something else, I’m thinking of caring as an example which may get pensioned if it earns no money but saves the national health service or the DWP care payments. There are instances where people are long-term ill and can be deemed to be accruing a pension. I think of the carers pension that was announced recently by the Government for those who do paid caring.

But the most important area of our work economy that currently is not pensioned is the pension that the state finds ways to pay through the state pension and looked for ways to pay through SERPS.

My friend , Andy Young, has called for SERPS to return with a fund behind it and not as a guaranteed pension but as one that pays out what it can under best estimates (aka state CDC).

This is a long answer to Johan’s question. Can we reward legitimate work even if it is for domestic work, for caring for adult care or even maternal or paternal care. These are the questions for a pensions commission. The reward for work should be deferred pay – a  retirement wage. There does not need to be earnings for there to be work  and we must find ways to link legitimate work with pensions.