Truth, Honesty and Justice
The Alternative to Wars, Terrorism and Politics

Home Page - Issues - The World Court of Justice - BOOKS - Contacts - Donate - Search

The Politics of Pensions
Publication date: 2002-07-12

Pensions are Again in the News in Britain ...

Another Pension Report?   -----   to top

Pensions are again in the news in Britain.

Much excitement about the fine details of the complex pensions arrangements, but what is it really all about?

As the rest of all the present government activities, pensions are the product of “politics”, rather than of honest government, and, as the rest of it all, they are a “mess”. And this is why they are again in the news.

And again to make sense of the “political” mess we have to start from the fundamental assumptions, and ask questions others fail to ask.

So what is a pension?

What is a pension?   -----   to top

A “pension” is an entitlement to receive a periodic payment usually after retirement or on reaching a specified age.

This entitlement could arise either as a result of government legislation, or as a contractual obligation in consideration of some services, or as a gift, or similar.

It is very important to understand the distinction between any activity of the government and private activities. Much of the problems with pensions are due to the failure to understand that distinction.

State Pension   -----   to top

State pensions are based on the assumption that a person above a certain age is incapable of earning a living, and for that reason should be supported at public expense.

It is true that sooner or later all people die, and if they live long enough they might at a certain age become senile, that is, their bodily and mental faculties diminish to such a degree, that they become incapable of earning a living or even of looking after themselves.

This, however, happens at different age for different people. Some might reach that condition at the age of 50, while others at 1301 or even later.

Also some people might possess sufficient wealth, which frees them from the need to earn a living, and, if they happen to lose their bodily or mental faculties, enables them to hire help without need for financial assistance from the government.

On the other hand, loss of bodily and mental faculties can happen for other reasons than old age. And, if such person has not sufficient wealth to support himself, he would still need financial assistance from the government to survive. The same is true of orphaned children, who, although having normal faculties for their age, are incapable of providing for themselves and need government help.

Also, if a person, incapable of providing for himself, lives in a family, and the family has sufficient resources to provide care to such person within it, the need for government assistance does not arise.

So, because some people can be in a position when they need help in order to survive, there is a justification for such help being provided by the government, as part of its duties.

The personal situations which give rise to such need are not, however, tied to a particular age, but depend on the particular circumstances of individuals.

So what is needed is a single welfare benefit, which would be payable to a person, because of his inability to provide for himself, regardless of the causes of this inability.

The purpose of this benefit is not to make all people “equal”, or to reward them for belonging to a “class” or for voting for a political party, but to enable them to live a reasonably comfortable life — without attempts at relative comparisons (pandering to envy).

Limiting such welfare benefit, to those cases, where it is justified, will also make it financially possible to keep it at a reasonable level.

Attempts to put everybody on welfare in the name of “social justice”, results in mass subsidised poverty, and leads to a situation when there is not enough money to provide for those who can't look after themselves.

Private Pension   -----   to top

Private pensions are the result of one person making to another person periodic payments, usually for the duration of the recipient's life.

Such arrangements can arise as a gift, or as a contractual obligation.

Such arrangements have existed long before the present “company” pensions came into being.

In the past an employer could give an annuity to a retiring employee, who worked for the employer for many years, as a reward. Or a large company could offer a pension as part of the contract of employment, conditional on the employee staying with the company for a specified number of years. This would be done to encourage employees staying with the company.

The present “company pensions” are the result of “left‐right” politics and of the doctrines of the “working class” and “industrial relations”.

How the Present Pensions System Came About   -----   to top

The “left”, that is the 20th century socialists, wanted to create a society where private property would be abolished and all the “National Wealth” would be controlled and distributed by themselves as welfare benefits.

This system has never been implemented in such form. The nearest to it was Soviet Communism, which proved to be unworkable and collapsed. But, in the West, a milder form of socialism was introduced.

Private property was not abolished, but socialist governments interfered with property relationships by means of various restrictions and controls, imposed high taxes, and interfered with private contractual relationships. Also a complex system of welfare benefits was introduced, the purpose of which was not so much to eliminate extremes of poverty, but to make people dependent on the politicians for their basic needs.

This system of benefits and government‐imposed “quasi‐contractual” relationships were creating constant problems and scandals and became subject of intense political struggle between the main political parties, each party trying to modify the system to favour, or to create impression of favouring, its “constituency”.

The Labour Party was increasing taxes, expanding benefits, and strengthening government intervention into private contractual relationships, while the Conservatives, were introducing various relaxations into that system, without scrapping it altogether as “political fraud”.

The present Pensions System was created as a result of that process: the Government Pensions are part of the Benefits System, the “company” pensions are an example of a government‐manipulated “quasi‐contractual” relationship.

The word “quasi” means “seemingly”, or “not quite”. Because contract by its nature means a voluntary agreement, and in law a contract made under any form of compulsion is invalid, a “quasi‐contract” is a contradiction in terms. But, while being nonsense, “quasi‐contracts”, that is contracts imposed by government, were “politically convenient” and “socially acceptable”, and this is why they exist.

But social acceptability has its price, and this price is not paid by the politicians, but by the people.

So, some people, who thought that the politicians had made them a great favour by promising them pensions, and relieving them from the responsibility for their own lives, started discovering, that the State Pension is not going to be as much as they expected, and that “company” pensions sometimes result in total loss.

And this is why the pensions are back in the news.

Why Company Pensions Must Not Be Compulsory   -----   to top

One of the proposals in the recently published report is to make private company pensions compulsory.

If this happens, it will be another crime committed by politicians against the people.

To start with, a contract of employment is a contract — that is a voluntary agreement between two parties equal under the law, and government has no right to interfere with such agreement.

There are also practical reasons why such imposition could be harmful.

Forcing upon an employee an obligation to accept an employer's pension restricts the employee's right to use his money to his best advantage.

The proposer (a political adviser) assumes that saving money for a pension is always good for the employee. This is not always the case.

It might be more advantageous to a young person to invest in his income producing ability, rather than putting some money in an investment fund (this is how most pension schemes operate) which might or might not produce an unspecified yield after some 40 years. And there is even a possibility that all the money invested could be lost. By investing this money in acquisition of income generating skills, he could achieve a much higher income for himself in a much shorter time, and as a result to invest more money into his future. He could also use this money in his own business, which might prove more profitable, than the pension scheme of the company he happens to work for. By forcing him to invest his money into the pension scheme of the company he happens to work at a moment in time, will deprive him of such opportunity.

The proposer also assumes that the pension scheme of the company, for which a person happens to work at a moment in time, is the best form of investment available to him.

This is not necessarily the case. There might be better ways of investing his money, but the criminal socialist government, who will introduce such compulsory pensions, will deprive him of the opportunity to make the best use of his money.

There is even no guarantee that the pension scheme of a particular employer will not result in a financial loss to the employee. And, if such pension scheme has been imposed by the government, then it will be the government who will have caused that loss. Will the politicians pay damages? And if, yes, will it be out of their own pockets, or public taxes?

It is equally wrong to impose a compulsory pension scheme on the employers.

The proposer assumes that all employers are perpetual institutions with unlimited funds whose function is to supplement welfare provisions of the government for the benefit of the “class” of employees (the “working class”?). This is a false assumption.

Employment is nothing more than a private contract between two parties equal under the law.

An employer is just a person or group of people who is prepared to pay a certain amount of money for a certain work done. Such requirement can be temporary or for some unlimited period until terminated by one of the parties. It might, or it might be not, favourable to the employer to offer to the employee a pension in addition to a salary as payment for the work done, but it is not to be imposed by the government.

The government adviser makes such false assumptions about the contract of employment, because his thinking is rooted in the doctrine of “Master and Servant”.

On “Masters” and “Servants”   -----   to top

The present doctrine of “industrial relations” is not based on the assumptions of a free society. It is rooted in the institution of medieval serfdom.

The legal basis of the doctrine of “industrial relations” is the doctrine of “master and servant”.

The relationship between master and servant is not that of a freely agreed contract, but that of a fixed hierarchical social structure.

The master belongs to the class of masters, the servant to the class of servants. The master owes to the servant unspecified duty of “care and protection”, the servant owes to the master an unspecified duty of “obedience”. Monetary consideration plays little part.

A “good” master might give his servant some pocket money to spend at the “fayre”, if he is in a good mood, but he has no obligation to do so. The master is obliged to feed and clothe his servant who is his property. This obligation of care remains even when the servant is ill or reaches old age.

Does this doctrine reflect the present contracts of employment? But this is the basis of the philosophy of the modern “industrial relations”. And it is reflected in expressions like: “My ‘boss’ makes me slave away for him for ‘peanuts’”. As if any employer has ‘powers’ to make anybody work against his will.

Ensuring a Secure Future for the People   -----   to top

If the people are to benefit from living in a free society, they need to learn to be responsible for their own lives. And this includes learning to use their time and money and accepting responsibility for their own actions.

People who do not feel responsible for their own lives, see whatever money they have as ‘spending money’. Give them £5, they will spend it in a pub. Give them £5,000, they will buy a cheap new car, or go on a cheap holiday. Give them £50,000, they will buy a more expensive car, and go on a more expensive holiday. Give them £1,000,000 and they will buy a few expensive cars, go on a few expensive holidays and in six months they will discover that they are ‘skint2’ and ‘sign on’ at their local ‘job centre’ as available for work.

Whatever, they get has to be spent. Just like that servant in 1200 A.D., who used to spend his ‘pocket money’ at the ‘fayre’. — Such are the practical consequences of the doctrine of “master and servant”.

But what about the expensive state education system, does it not teach people how to manage their own lives?

Conclusions   -----   to top

The government should not interfere with private pensions and savings, except by educating people to manage their life through the state education system. This will also help to reduce crime.

The welfare benefits should be simplified and restricted to those who cannot provide for themselves regardless of the reason.

The taxation system should be simplified and not used for “political” purposes. This will leave more money in the hands of the people and enable them to create more wealth and save for their old age. A single income tax at the rate of 20% should be sufficient, once the government becomes honest (non‐political).

The only problem with this is, that, to achieve the above, all the socialist teachers, ministers and their advisers will have to be either re‐educated or sacked.

Notes:   -----   to top

1) Two months ago (May 2002), a man died in a village in Saudi Arabia at the age of 133. He had 9 wives during his life, the last of which he married at the age of 90 (she was 43 at the time). At the age of 96 he begat a son, who is now 37, and is the youngest of the 23 sons now living. He was enjoying good health until the age of 130.

No, he did not take Viagra tablets, nor was his longevity due to the NHS.

Back to text

2) In the second half of the 20th century there were quite a few cases of people ‘coming into big money’, and then ‘blowing it all’ in a few months.

One of such cases got high publicity and became subject of a book, a film and a song ‘Big Spender’.

Back to text

Tweet       Follow @wcj4

If you have found this article stimulating, check out other articles.

If you disagree with us, tell us. Prove us wrong, and we shall agree with you.
If you agree with us, spread the message of Government by Truth, Honesty and Justice.

If you want us to deal with more issues and publish more articles, send a monetary donation.

You can see printed books and publications at Truth and Justice Publications Ltd website and find out how you can buy, borrow or review them.

If you want to be informed of any new articles on this site, send us an empty email, by clicking here. If you are interested in articles only on a particular subject, tell us so in the email.

Home Page - Issues - The World Court of Justice - BOOKS - Contacts - Donate

Copyright (C) 2002 Shams Ali — All rights reserved

WARNING: The Google Search data can be out of date. For up to date search go to the issues and browse through the contents using your browser search (find) facility.

Search WWW Search Search

      to Top