UK – A professor at the London School of Economics has called for a “much higher” level of pay-as-you-go state pensions and a ditching of the pretence that pensioners only get back what they put in via the national insurance scheme.
“Would it not be better to reverse the rush to fund, and look for old-age security in a much higher level of pay-as-you-go basic state pensions?” asks professor Ronald Dore.
“Even if there will be only 2.5 workers to one pensioner in 30 years’ time rather than 3.5 as now, they will presumably be richer than we are, and it should not be impossible to maintain that minimal degree of social solidarity which will make the necessary taxation acceptable,” Dore says.
In a letter to the Financial Times, he writes: “A first step would be to make the pay-as-you-go nature of the pension system unequivocally clear, rather than maintaining the pretence that people are only ‘getting back’ in their pensions what they themselves have paid in National Insurance.”
He proposes that National Insurance should be renamed the Social Insurance and Old Person Support Tax.
Dore is a professor at the Centre for Economic Performance at the London School of Economics.