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The Actuary The magazine of the Institute & Faculty of Actuaries

A personal view

A few months before I was born Bleriot was the first man to fly the Channel. During my lifetime I have seen two major worldwide wars, men on the moon, and atomic bombs. There has also been an amazing increase in productivity, particularly in the western world.

Anyone who had predicted these developments in 1910 would have been regarded as, at best, a dreamer. What is likely to happen in the next 50 or more years is equally difficult to predict.

Pensions, particularly state pensions, require long-term thinking but, if we are realistic, we must accept that the reality is we do not know what major changes are likely, changes which must substantially affect the outcome. What we can realistically do is to examine the present position and the likely position during the next five to ten years.

The Institute president’s report says that ‘there was a large majority in favour of a basic state pension financed on a pay-as-you-go basis from taxation at a level sufficient to eliminate most means-testing in old age’ – I question whether this is realistic. Has any attempt been made to ascertain what increase in taxation would be necessary and whether any government, of whatever hue, would be willing to give pensioners priority over schools, the NHS, housing, the armed services, etc. All the evidence I have seen so far indicates that the Treasury officials are necessarily committed to the maintenance of means-testing. Unless, and until, this crucial question is clarified much of our approach must look like unreal posturing.The crucial question is to what extent state and private investments will encourage the growth in productivity necessary to enable the future smaller, more active part of the population to meet the increasing demands of all.