Boomers = bust for the next generation
Staple Inn was again the scene for the Worshipful Company of Actuaries' Livery Lecture. The guests were Masters from a wide range of Livery Companies, and our Master, Peter Thompson, started the evening in an actuarial fashion, gathering data on the years of birth of those present. The vast majority were baby boomers, according to guest speaker and former Conservative MP Lord Willetts' definition.
It is five years since he published The Pinch: How the Baby Boomers Took Their Children's Future - And Why They Should Give it Back, which put the issue of fairness between generations firmly on the political agenda. The audience was reminded that baby boomers have a disproportionate share of personal wealth. The distribution of pension rights is an example, with baby boomers making low contributions based on high discount rates and strong asset values, leaving the next generation to face the cost of meeting deficits in their DB pension plans.
Whether looking at tax payments to meet the costs of the welfare state, or calories expended by Amazonian tribes feeding their youth and elderly, the presentation highlighted that globally we are net consumers before the age of 17 and after the age of 60. In a stable population, with longevity fixed, this works well and is the heart of the intergenerational social contract. But as a demographic 'bulge' passes through, economic growth supports their increasing wealth but leaves successors overstretched.
They also dominate democratic processes and policies.
The multi-century history of many Livery Companies bears witness to the understanding that our forebears had of this social contract and to the truly long-term investments they made for future generations. And I now understand why my parents downsized and started spoiling my son when I gave my mum a copy of The Pinch five years ago. Baby boomers take note! The Worshipful Company of Actuaries would like to thank Aon Hewitt for their generous support for this annual lecture.
