Pensions are a hot potato for every government. They pose a challenge as our societies are leading healthier lives thus prolonging the life expectancy, subsequently, the demand for pensions is constantly on the increase and with it the budgeting in every financial plan. Pensionable age has already been extended but there is a limit until when one can keep on working and maybe it is high time that Private Pension Schemes should be given more consideration as we will soon come to a point where our National Insurance scheme will no longer remain sustainable. This is already stretched to the limit, and with our working force decreasing slowly but surely, we will soon come to the point where the contributions will simply not cover the cost of the pensions.
The system worked perfectly for decades after it was introduced, with families having five or six children each, these were perfect contributors to the system. This is no longer the case. The scenario as we all know has changed and it has changed drastically. It is now obvious that the contributions paid are not high enough but then again to increase the contribution would mean taking money directly from the workers’ and the employers’ pockets; so unless there is a considerable increase in salaries and some form of subsidy for the employers (which, it has to be said, the European Union is not too keen on) this would pose a problem just like it posed a problem when the national contribution was increased from one twelfth to one tenth.
How can we gear up and be ready for the implosion? The government will be in a position to cover the shortfall for a number of years but there is a limit. Is there one clear cut solution? No. We have grown up with the wrong assumption that the pension entitlement is guaranteed, to makes matters worse politicians actually believed that the collapse in the system will never actually happen, so instead of trying to find a solution they were content with thinking that it will never happen in their life time.
We all have to make adjustments, in the next ten to fifteen years the damage will be minimal, we will just have to work a bit longer and have a shorter retirement, with the consoling fact being that we will be healthier.
We have to really start thinking outside the box. Making the most out of a problem and use it to our advantage. Canada and Australia used the immigration problem to beef up their working population, thus making them contributors. This cannot be done randomly though, but with a plan, it could actually be a success. We cannot consider the immigrants as just labourers, as fillers. We need to invest, teach them a trade and help those who are willing to integrate and become a part of our society do so and make the transition as smooth as possible. I know this will probably raise eyebrows, but unless we try we will never know. It has worked with a high degree of success elsewhere and therefore I don’t know why it cannot work here. Our ancestors were part of this process once, when they immigrated to Canada, the US and Australia, it is part of the mechanism of an ever changing world and we must embrace it in order to be able to move forward.
Those who are in their forties and over will be probably lucky enough to reap the benefits of our contributions, but life should not be just about us, we need to ensure that our future generations are covered and the onus is on us to make the right decisions even if at present they might seem anything but.