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The Case of the Shrinking Old-age State Pensions

or    What Happened to Our Pension Moneys?


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The Case of the Shrinking Old-age State Pensions

or   What Happened to Our Pension Moneys?

Pay   (Pay, Wage, Salary, Remuneration, Emoluments)

Pay is wage or salary, plus any share of profits. It includes payments and fringe benefits such as assistance with house purchase, life insurance, pension and social insurance contributions by the employer, car and travelling expenses, paid holidays and benefits provided by government.

Pay is pay, no matter what it is called. There is no difference between 'pay', 'remuneration' or 'emoluments' as long as we include all direct and indirect payments and services received from the employer.

And pay includes the social security payments made by both the employee and the employer, and in the end by the government, on behalf of the employee.

See the report    Work and Pay: Summary

General Interest Rates and Share Prices

Increasing the general interest rate reduces share prices, and reducing the general interest rate increases share prices, since the return from shares (dividend payment as a percentage of share price) tends to move towards the new interest rates. So share values may increase steeply, and may be kept up artificially, by reducing interest rates and by keeping interest rates low.
However, share prices also depend on other factors such as the risk associated with the investment, and the country's creditworthiness as reflected in currency exchange rates. Profits tend to increase in measure with inflation and profitability also determines share prices.
See the report    Inflation, Balance of Payments and Currency Exchange Rates

Pension Funds: In Surplus, or Underfunded

As interest rates were reduced and as share values increased, corporations (companies) have withdrawn corresponding 'surpluses' from their company pension funds and added them, or a substantial part of them, to shareholders' profits.

As share prices fall, pension funds can become underfunded. Companies may then be obliged to make up the underfunding to some extent. It appears that the likelihood of this happening may be a factor when companies change, or advocate changing, established pension schemes.

So companies are likely to withdraw surpluses from their pension funds to benefit owners and shareholders. And companies are also likely to refrain from making good a pension fund's underfunding, that is are likely to refrain from paying company moneys back into the pension fund when such repayments are needed to maintain or improve their pension fund's present and future pensions.

See the report    Inflation, Balance of Payments and Currency Exchange Rates

Company (Corporation) Pension Funds

Company pension funds generally offer better pension provisions than commercial pension schemes. At first employers used their pension schemes as a way of motivating people to stay with the employer, to reduce staff turnover and its associated expenses.

Company pension funds in the UK are usually managed by 'trustees' on behalf of the pension fund's contributors and pensioners. But the terms of the trust deed usually provide that the employer (the company) has a controlling say in how the fund's moneys are to be invested and used. And some employers have insisted that pension fund surpluses be transferred to company profits.

Pension funds run into many GBP billions and between them own, and thus are in position to influence and control, much if not most of UK's equities.

Such moneys and funds represent the working population's savings. These moneys are in effect taken from ordinary people and placed under the control of a few people at the top who in this way gain power, are enabled to dispense patronage (and support each other), gain high incomes and much wealth.

Control of such moneys and funds should be under the democratic control of those who contributed and those who are contributing to them, should be in their hands and be exercised by them. But at present it appears that, although limited by certain legal safeguards, those at the top have a deciding control over these moneys.

See the report     Understanding How Society is Organised for Controlling and Exploiting People

Value (Take-home; Purchasing Power) of a Pension

The UK's Conservative government, for example, began to withhold from pensioners their share of the increasing national income and wealth, for no apparent good reason, amounting to something like 2 percent of their pension every year. Pensions had been linked to the index of average earnings but in 1980 they were linked to the cost-of-living index. As a result their present pensions are a fraction of what they ought to be, have now to be increased by over 34 percent just to reach the level at which they should be now. And pensioners still have to be compensated for the moneys withheld from them without good reason by the government since 1980.

See the report    What People are Struggling Against: How Society is Organised for Controlling and Exploiting People

and see     Corrupted Economics and Misleading Experts

What Happened to Our Pension Moneys?

We save each week or month, aiming to provide us with a good and secure income when we retire from work in old age. We entrust these savings to the government for an old-age state pension, and to company pension funds or to private enterprise pension funds.

Our savings towards the state pension are paid to the government on our behalf by our employer, consisting of the sum of

a fixed and agreed amount (percentage) deducted from our earnings by the employer,

and an equally fixed and agreed amount paid directly by the employer which, although it usually is part of the negotiated and agreed pay, is referred to as 'employer's contribution' (apparently a matter of company tax accounting).

Private enterprise pension companies, investing their customers' moneys and providing pensions, appear to be responsible and accountable to their shareholders for profitably and securely administering the moneys entrusted to them.

The working population, saving week by week, month by month, year by year, decade for decade, for a secure and comfortable life when in frail old age, has entrusted and is entrusting, its moneys, its savings, to the government.

I consider that an important part of a government's responsibility is to plan ahead and manage these vast amounts, the nation's savings, to maintain their value, to maintain the purchasing power of the nation's pensions, to ensure pensioners share in the country's rising standard of living and quality of life.

Why are pensioners prevented from sharing in the rising standard of living they helped to create?

When pensions increase by less than inflation (the cost-of-living increase), poverty and suffering result.

Why is the pensioners' standard of living, the quality of their lives, allowed to fall?

And at times we are now even being told that present contributors are not saving to provide pensions for themselves, but instead are paying the pensions now being given to the pensioners of the day, to an older generation. It appears we are in this way being told that the savings we entrusted to the government, are not really available for us when we need them or that they are inadequate.

It has been known for many years that people live longer, that our population was 'ageing'. So one wonders if these moneys, the nation's lifetime pension savings, entrusted for safe keeping to the government by the people, have been used in other ways or for other purposes?

Why are these moneys not available now for providing the needed pensions? Who was responsible for looking after these very large sums entrusted to government? Why are the state pensions so inadequate?

We should be told the underlying facts and perhaps the government would like to explain why our pensions are so inadequate under present conditions.

See the report    Directing and Managing Change

Informing the Population about the Government's Financial Operations

The ways in which taxation can be used and misused to shift the tax load between income groups are numerous and often hide behind fine-sounding phrases.

Companies (corporations) distribute yearly a 'Funds Flow Statement' to their shareholders which states in plain language where moneys have come from, and what they have been spent on, for a particular year. And, similarly, we should get a funds flow statement for the country's operations as a whole.

Companies and corporations present annual accounts to their shareholders including Funds Flow statements. Community accounts should be made available also in form of a 'Funds Flow' statement, as these can show clearly in meaningful terms where the funds have come from and what has been done with them. In terms such as 'Received from Income Tax', 'Received from Corporation Tax', 'Spent on Unemployment Benefit', 'Spent on Payments to Corporations', and so on.

Including independently audited statements from our government stating what moneys they have received and what these have been spent on. Stating in plain language who provides how much, for different income groups, showing types of taxes referred back to these income groups, and what the moneys have been spent on. Including and showing direct and indirect payments and transfers to the income groups, as well as showing what taxpayers received in return for the taxes collected from them.

See the report     Taxing the Population for Private Profit

Short Descriptions of Sources

The material quoted here was first published in the following reports by Manfred Davidmann:

Title   Description
Work and Pay: Summary   Concise summary review of whole subject of work and pay, in clear language. Covers pay, incomes and differentials and the interests and requirements of owners and employers, of the individual and his family, and of the community.
Directing and Managing Change   How to plan ahead, find best strategies, decide and implement, agree targets and objectives, monitor and control progress, evaluate performance, carry out appraisal and target-setting interviews. Describes proved, practical and effective techniques. See 'Press Notices'.
Inflation, Balance of Payments and Currency Exchange Rates   Describes, reviews and illustrates the underlying relationships. How inflation affects currency exchange rates and trade. How interest rates determine share prices and pensions, and thus also the extent to which pension funds are in surplus or underfunded. Discusses multinational operations such as transfer pricing, inflation's burdens and worldwide inequality. Clear diagrams and worked examples.
See 'Press Notices'.
Understanding How Society is Organised for Controlling and Exploiting People   Describes how corporations (companies) accumulate their capital and reserves from moneys taken from customers. Enterprises are allowed to collect, take over and control such moneys and co-operatives also take over moneys from their members. Describes how people's massive savings are placed under the control of others.
What People are Struggling Against: How Society is Organised for Controlling and Exploiting People   Report of study undertaken to find out why people have to struggle throughout their adult lives, in all countries, organisations and levels, to maintain and improve their standard of living and quality of life. Reviews what people are struggling against.

Corrupted Economics and Misleading Experts

  Shows how 'Economics' is used to misinform and mislead the general public. Clearly states underlying considerations of specific important economic relationships and comments on misleading political interpretations and on role of independent experts.
Taxing the Population for Private Profit   Shows how taxpayers' moneys are used in different ways to enlarge the profits of companies (corporations). These are in effect allowed to tax the population and to pass large parts of their operating costs to taxpayers and so to competitors.

Manfred Davidmann

Manfred Davidmann is an internationally well-known and respected scientist and author of a number of books and reports which have had and are having considerable impact. His work usually breaks new ground and opens up new understanding and is written in meaningful and easily understood language. Outstanding is that his work is generally accepted as factual, objective and unbiased.

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The Site Overview page has links to all individual Subject Index Pages which between them list the works by Manfred Davidmann which are available on the Internet, with short descriptions and links for downloading.

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