The Pensions Timebomb jpoc opinion
I am sure that everyone who is reading this understands what it generally meant by the phrase "Pensions Timebomb". In the future, as the population of developed countries falls there will be fewer people in work to pay social taxes necessary to fund the retirement benefits of the older section of the population.
Governments throughout Europe are reacting to this, often slowly and in the teeth of great resistance, by forcing their working populations to save privately for their retirement pensions. People in work object to this. They are paying high social taxes today to support the retired but they are also being made to save to support themselves in retirement.
It is probably good for social peace that most people do not realise that the real situation is far worse than they understand.
Just imagine a future in thirty years time. jpoc hopes to be retired along with, no doubt, a good many of the people reading this. I hope to have saved sufficient to fund a comfortable retirement but I fear that any amount of money may prove to be insufficient. The reason is simple. Even if I have vast savings they are only any good as a pension if I can find some place to invest the money to provide an income for what I hope will be a long and contented retirement. The proportion of the population in that position will be about a third more than it is today and the proportion that will be working will be halved and so there will be twice as many retired persons per worker as there are today.
Even if all of those retired people have plenty of money, what will they spend it on? Where will they get all of the golf clubs, thermal underwear and Horlicks if it is not being produced by a decreasing workforce? Well, if worker productivity doubles and the working population does not see any benefit from this, then there will be enough to go round. Is that going to happen? Well, doubling worker productivity in a generation is a tall order and even if all this "new economy" stuff is for real, will the people producing this wealth be prepared to forego the benefit in order to keep the old folks supplied with reclining arm chairs and foreign holidays?
I fear that if things continue as expected, there will be a major conflict between the generations and nobody seems to be addressing this issue.