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Trade Union Congress’ warped view of pensions

Trade Union Congress’ warped view of pensions

The recent call by the TUC’s General Secretary, Frances O’Grady, for the planned rises in state pension age to be scrapped until life expectancy is levelled all over the country is a worrying case of sloppy thinking from someone who is supposed to be addressing issues on behalf of a large section of the UK workforce.

Her rather ridiculous reasoning is that because life expectancies vary so much across the country, there will be a £67,000 difference in the amount paid out to someone who lives the average span in the highest area – East Dorset – compared to someone who lives out the average lifespan in an area that has among the lowest life expectancy – Northamptonshire.

State benefits are not meant to be divided equally among all citizens. The point of the welfare state is to ensure a minimum level of life quality to those who for some reason or another are not in a position to provide for him or her self. Hence those who are unfortunate enough to be unable to get a job or are too ill to work are ensured that their basic needs will be provided for via the state.

Among these benefits is the state pension. This pension is given to ensure that those who are too old to earn money can have a basic standard of living, which can be topped up with any provision they have themselves made for their future. The state guarantees that this will be provided as long as the pensioner lives.

Ms O’Grady believes that those who live longer are somehow ripping off those who die younger. She misses the point that it is the taxpayer who is providing the benefit to pay for the elderly wherever they live. It comes from their National Insurance fund and the pension segment ensures that you are insured in case you outlive the amount of money that you contributed.

Ms O’Grady seems to have difficulty understanding how insurance works. It is similar to having your house insured against fire. In her world, the people who have their house burnt down and get the money to rebuild get one over over all those who are unlucky enough to keep their home intact and therefore get nothing for their money.

The General Secretary wants the raising of the state pension age stopped until life expectancies equalise all over the country. She seems to feel that this would be fairer, forgetting that even if we get average life expectancies the same all over the country, individuals will still die younger and older than the average and therefore will either win or lose out just as much as they do now. Perhaps in Ms O’Grady’s rather dystopian vision the pension system won’t be fair until everyone dies having had the same lifespan, a sort of Brave New World where people are taken off to die once they reach a certain age.

The danger here is that someone who should know better is now arguing against the changes in the pensions arena that are so desperately needed to maintain the system. Increasing longevity means that people have to work longer; it’s as simple as that. Of course it’s possible that they could retire earlier if so much of government pension spending wasn’t going to a small elite group – public sector employees (see previous blog). Any chance of the TUC pushing to remedy this unfairness, Ms O’Grady?

Tom Murray

Twitter: @TomMurrayDublin or @Exaxe

Google Plus: TomMurray

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