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Nil

posted by [personal profile] towith at 05:31am on 26/09/2011
Whilst working in the bar I overheard two gentlemen discussing the raise in the retirement age. One gentleman bemoaned the supporters of the raise by saying "They only care about money". This is a somewhat common complaint, so it is certainly worth exploring.

What is money? Money is not simply the pieces of paper in your pocket, money encompasses a massive range of concepts. One of the most important of these concepts is money as a means of communication. Money or more accurately prices, communicate supply and demand. If the supply of an item/service is low and the demand for that item/service is high, the price will become high.

Let us assume then that the state retirement fund is poorly managed and it's stocks are being constantly pilfered to fill gaps in other services. It is a shocking concept but let us continue. The pension funds will therefore have to be taken directly from the tax coffers, which means that today's taxpayers/workers are paying directly for today's retirees. If the supply of workers then exceeds the demand of the retirees, we have no problem. If however we live in an aging population, the demand of retirees might exceed the supply of workers.

At this point we have several options. We may cut or scrap the retirement fund, which may mean most retirees will have to return to work. Or we can raise the retirement age and only a few retirees will have to return to work. Personally I would scrap the retirement fund for anyone retiring after 2030. Unless a devastating crisis decimates the fabric of society, we will continue to live long lives, making an ill-managed state pension absolutely untenable in the long term. Announcing plans to scrap it now would simply be more honest and allow people to make alternative plans.

You could ask why the state couldn't manage its duties more professionally, but that is a whole different post entirely. In short, it is the same reason why a man can become elected on a hope/reform platform and then authorise the assassination of one of his own citizens. Politics is about perceptions, not facts.

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