Older people giving up jobs for young

[poppet2]

Isn't this age discrimination?

[phawley]

Not a bad Idea however since there are more old people than us young people we will have to support them longer with pensions etc.

 

I have will paid income tax and national insurance for 50 years to pay my pension when I retire in 3 years time, what makes you think you will be supporting me?

[Flowersfade]

I have will paid income tax and national insurance for 50 years to pay my pension when I retire in 3 years time, what makes you think you will be supporting me?

 

Because there are more oldies than us young ones.

[Vague_Boy]

I have will paid income tax and national insurance for 50 years to pay my pension when I retire in 3 years time, what makes you think you will be supporting me?

Because UK pensions are a Ponzi scheme.

 

Why our pensions are like illegal ‘Ponzi’ schemes

 

You’ve heard of Ponzi schemes, right? It’s the classic investment confidence scam (see how they work below). And the law doesn’t tend to look upon such schemes too favourably. They’re illegal.

 

But whether you know it or not, you’re already involved in a huge version of something a lot like a Ponzi scheme.

 

It’s called the State Pension.

 

It had never occurred to me before, but something dawned on me when reading about Bernard Madoff’s colossal fraud: the way our pensions and these illegal schemes work is eerily similar.

 

Are you happy about that? And, since all such investment schemes eventually collapse, will we ‘late entrants’ be ripped off?

 

How Ponzi schemes work

They’re the classic investment scam, named after Charles Ponzi, an Italian immigrant to the USA. Wikipedia describes such schemes as “any scam that pays early investors returns from the investments of later investors”. Here’s how they work:

 

1. Mr M persuades Miss A to invest in his scheme promising a high return
   
2. He then persuades B, C and D to also invest and uses this incoming money to pay Miss A her investment with returns
   
3. As he persuades other people to invest, their incoming money is used to pay B, C and D their high return
   
4. However, this is not sustainable and eventually those further down the chain lose out!
   

 

They fall flat because there’s no money actually in the scheme. New deposits are always being siphoned off to feed departing investors. Once the numbers get out of hand, kapow, everyone left in the scheme (usually the most recent investors) lose out.

 

So what’s this got to do with state pensions?

 

How Pensions are like that

When the State Pension was first introduced, it was envisaged that people would contribute a percentage of their income through National Insurance to fund their pension later in their lives – essentially a big state-sponsored savings scheme.

 

However, after WWII the Government realised it had a problem. There were people needing pensions immediately who, thanks to the war and the Great Depression, had not been able to contribute to the scheme. How would the state afford the weekly benefits for all these new retirees who had been part of the war effort?

 

Thus the Basic State Pension became a ‘pay-as-you-go’ scheme. Instead of being funded by pensioners’ past contributions, payments would be funded from the National Insurance (NI) contributions of the present workforce.

 

In other words, the rewards for those exiting the scheme (i.e. retiring) can only be sustained by those entering the scheme (i.e. starting to pay NI).

 

Can you see the similarities with a Ponzi scheme?

LINK

[Vague_Boy]

I thought this crummy government wanted older people to work longer.

Inevitable due to increased longevity.

 

30 or 40 years ago, people would retire, live a few years, then die.

 

Now they're living for a few decades.

 

And not on fresh air.

 

Money is what we lack.

 

Pension age 'will have to rise to 70 because of Labour's reckless borrowing binge'

[Resident]

Just get over our own self-righteous morals and implement "Logan's Run"