From the Guardian this morning:
John Hutton says taxpayers can no longer afford to support the pensions of state employees (Report, 8 October). Unfortunately, he misses an obvious point. As my recently published research has shown, in 2007-08, private pension funds in the UK received subsidies amounting to £37.6bn while paying pensions in that year of just £35bn to those in retirement. The result was that in that year every single penny of pensions paid in the UK were paid at direct cost to the UK taxpayer, and none in effect by anyone else. The question Hutton should therefore be asking is not whether pensions should be paid by taxpayers or not, but whether there is in fact any viable, working alternative to pensions being paid by taxpayers?
There is, but only if we change our understanding of pension funds so that they are not seen as savings pots and are instead seen as investment funds to be used to generate the future wealth which those anticipating retirement hope to enjoy in their old age. Hutton shows no understanding of this issue.
Richard Murphy
Director, Tax Research
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the whole tax system is riddled with anomalies, a professional footballer can put a huge percentage of earnings into a pension and retire for tax purposes at 40(robbie fowler,liverpool multi millionaire, not many england caps).the subsidies to private pensions ,like the previous tax deduction for mortgage interest, exist because the middle classes are fed up with paying through their taxes for the state’s unfunded pay as you go benefits to all and sundry.the question Hutton should be asking is why do we not tear up the whole tax and benefit systems and start again.
Interesting one, I had my own take on Public Sector issues and much the same principles might apply to private. One trouble with all types is the gross abuse by the Plundercrats who are taking out more than ten times the pension of the average. There needs to be a rebalancing all round and immediately. Also, what future wealth?
@william
But you utterly miss the point
People should be fed up with paying double the necessary price for private pensions
The problem is not as I argue public sector pensions – which are apparent as to cost – but private sector alternatives which are extraordinarily wasteful and require 100% subsidy from the state
And re your last comment – sorry – but I’m not a revolutionary
It’s not my style
Nor most people’s I suspect