PENSION POWER

24-04-2009

Imagine if our pension pots were used to power major projects from which we all enjoyed a benefit, rather than being thrown into the casino of the Stock Exchange. Barbara Panvel outlines a vision.

Peter Sampson was looking for a coherent idea from the left which would put the country back on its economic feet see link here and a lead has been given by MP David Drew.

He is a member of the Left Economic Advisory Panel [LEAP], which meets regularly at Westminster, and years earlier predicted that the combination of household debt, privatisation and the global financial setup would combine to threaten individual economies.

He referred to a 'working programme' designed by LEAP which specifies restoring manufacturing, especially using green technology, stepping up investment in public services and ending dependence on privatisation.

I contacted one of LEAP’s members, senior accountant Richard Murphy of Tax Research UK, sending him links to the three Stirrer articles on the ‘big new idea’ which he appreciated. He directed me to the People’s Pensions programme:

“We have a pension crisis because we’ve been investing pension cash in the wrong things. The stock market has absorbed most UK pension investment but less than 15% of that money has actually been used to create new investment in the UK economy. The rest has been used for speculation.

“The government now has a duty to make sure that a more reliable basis for paying pensions is created – we can’t gamble our future security again. People’s Pensions can create that security. It’s a double win. It will also mean that the current annual £16.5 billion of state subsidy for pensions, most of which is now gambled, is better used”.

The People’s Pension would provide a stable environment for private pension investment and answer Britain’s “double dilemma” of a worsening pensions shortfall and public sector investment backlog, providing the funds needed to build new schools, hospitals and public transport without the need for PFI or new government borrowing.

Richard Murphy, Colin Hines and MP Alan Simpson wrote a report proposing a new framework for pensions, based on investment in public infrastructure projects and services, which is currently not an option for UK pension funds. neweconomics.org/ This thinking formed the basis for the Brummie Bond proposal welcomed at council level in Birmingham some time ago.

A People’s Pensions scheme would allow people and organisations to put pension savings into jobs created in the sectors of face-to-face caring and infrastructure renewal, improving the sewerage systems, schools, hospitals, care homes, transport, and energy systems. The Look to the Local job generator would be the mainspring of the local economy.

“The merit of what is proposed is its simplicity. Instead of going into stock market speculation people could choose to direct their pension savings into infrastructure investment: real cash investing in real assets … boosting the cash available for public services projects at a much lower cost than PPP or PFI options and restocking the value of UK pension plans so that they provide a secure and dignified retirement.”

Alan Simpson MP

“Pension reform is part of any New Deal..... and I think that the way I suggest is the way to go. Never again should we allow people to so recklessly invest the savings of our potential pensioners in hopeless speculation in the meaningless shares issued by major corporations whose life expectancy is, we all know, more limited in most cases than the people on whose behalf the funds are invested.” Richard Murphy - taxresearch.org.uk

“We are providing a new choice for those who want to save for their retirement. No one would have to buy a People’s Pension. But if you did you’d have the benefit of knowing you’d provided for your old age and helped your local economy, all at the same time.” Colin Hines, convenor of the Green New Deal group

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