Letter: Pension reform will pay for itself
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Sir: You are wrong to say that the Government's new pension plan would make youngsters "pay twice" - once to fund their own pensions, and again to pay for the rest of us (Business comment, 6 March). In fact, switching from the state's chain-letter pension scheme to a properly funded system gives a vast boost to economic growth that makes the transition pay for itself.
People regard National Insurance as a tax - indeed, a tax on jobs. So people are less willing to do a job, and employers less willing to create them. But if the money is going into their own personal growth fund instead of into the Government's coffers, the incentives are reversed.
The state scheme is a financial fraud, paying a return below 2 per cent on what the average married man contributes. Singles and those above the average often get negative returns - they would be better off keeping their National Insurance contributions under the mattress.
The state scheme leaves people with less money available to save for themselves. Replacing it with a funded system means a rush of new investment into British industry, generating new economic growth.
Professor Martin Feldstein of Harvard University calculates the benefit of changing from a pay-as-you-go to a funded system in America at 3 per cent of GNP each year - doubling economic growth. It would take an economic gain of less than a tenth of that for the Government's new scheme to pay for itself, without anyone at all having to "pay twice".
Dr EAMONN BUTLER
Director
Adam Smith Institute
London SW1
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments