The FT reports that the OECD warns on pension crisis:
Strains in pensions systems, in both private and public provision, threaten to turn the financial crisis of the past two years into a social crisis lasting for decades, the Organisation for Economic Co-operation and Development warned on Tuesday. In its annual analysis of the health of pensions systems globally, the Paris-based organisation found private pension plans lost 23 per cent of their value last year, while higher unemployment "leaves little room for more generous public pensions. Angel Gurría, the OECD secretary-general said: "Reforming pension systems now to make them both affordable and strong enough to provide protection against market swings will save governments a lot of financial and political pain in the future".
There's no rule that says that public pensions have to be financed only on wage-based contributions only. Thye could be financed by taxes, which can be progressive.
All of these crises (like that of public finances) exist only because of the highly consistent decision by all writers to not even consider higher taxes.
As to private pensions, why is it a problem? Why should governments care? People were allowed to be free and make their own pension arrangements without government interference, why should they be bailed out or helped in any way? They made their decisions and have to be responsibile for them, no?
Or is this just about giving more tax breaks and subsidies to the pensions funds management industry?
Whiners. In the long run, we're all dead. John Maynard Keynes
For public pension funds and public funded medical care a Tobin Tax on financial transactions dedicated to these purposes could simultaneously help put them on a sounder footing and provide a much needed check on purely speculative financial transactions. The extent to which finance has been allowed to become a parasitic public casino that primarily serves only the financiers is another under reported scandal.
But as to private pensions and corporate pensions, the proper remedy is to make all wealth derived from corporations and "wealth management" firms, including gifts, trusts, etc. subject to "claw back" provisions before the beneficiaries, excluding corporate management, take a hit to their retirement funds. At a minimum, these employees should be entitled to the cash value of their contributions and the contributions made on their behalf. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
