tag:blogger.com,1999:blog-5908830827135060852.post5260896131568270165..comments2024-03-01T02:40:14.946-05:00Comments on Bond Economics: Difficulty Of Extending Universal State Pensions (Part 2)Brian Romanchukhttp://www.blogger.com/profile/02699198289421951151noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-5908830827135060852.post-21597287404094296822016-02-18T06:55:11.439-05:002016-02-18T06:55:11.439-05:00What I am talking about in this section are transf...What I am talking about in this section are transfers that are unrelated to working age contributions (in whatever form they take). Essentially, an income guarantee for oldsters.<br /><br />My "feasible limit" is my feeling of what would work politically in the long run. As an example, assume that the OAS is raised to $25,000 per adult, and somehow price and wage levels did not move. A couple who both turned 65, and somehow never managed to work, might be raking in more than a couple who were both working at low end retail jobs, and who were actually paying a fair amount of tax. This is not going to make the people who are working particularly happy. And once the programme looks vulnerable, things snowball against it - young people will quite rightfully view it as unsustainable, and that they will never see similar payments. The only way the politics works is if you embed the payments within a larger "basic income" programme; benefits for seniors may be higher, but not disproportionate.<br /><br />To be sustainable politically, the benefits need to be tied to working age contributions, as the benefits are no longer a gift; they are a right. That's what the CPP programme does, and I will be writing about it next. I wil then be trying to respond to your points. I do not exactly disagree, but the government is still somewhat forced to act like a private sector pension, and hoard financial assets, as a result of how the financial flows work.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-49149053330199248992016-02-18T03:18:50.053-05:002016-02-18T03:18:50.053-05:00"If we keep the increase near my "feasib..."If we keep the increase near my "feasible limit" ($12,000)"<br /><br />The thing we have to understand is why direct transfer (with possible associated taxation) is 'unfeasible'. Yet the higher taxation of pension contributions plus payment by a private provider is feasible. <br /><br />Even though they are essentially the same thing - with the private provider (or public middleman <a href="http://www.nestpensions.org.uk/schemeweb/NestWeb/public/home/contents/homepage.html" rel="nofollow">like the UK NEST</a>) being more expensive because of higher overall admin costs - and tying up real resources doing something that is essentially pointless.<br /><br />Then perhaps you can see a middle way where people 'contribute' to a public pension savings account where they can see their 'capital sum grow', and then when they retire they get a payment 'based on that capital sum'. <br /><br />Whereas of course the whole thing is a complete political fiction and the numbers in the 'capital sum' account are just numbers that grow ever year by 5% or 7% or whatever the growth rate is to enable the end transfer that was going to happen anyway. <br /><br />So you create a facsimile that looks like a pension fund, but it doesn't actually invest in anything real. Which would make it the same as all current pension funds :)<br /><br />NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.com