can we afford our future?
DESCRIPTION
STICERD 25th Anniversary Lecture. Can We Afford our Future?. Emeritus Professor Howard Glennerster FBA ESRC Professor John Hills LSE, Chair. Conference and Events Office. www.lse.ac.uk/events. Population structure, 2001 and 2051. Age distribution of welfare spending, 2001. No Problem!. - PowerPoint PPT PresentationTRANSCRIPT
Can We Afford our Future? STICERD 25th Anniversary Lecture
www.lse.ac.uk/eventsConference and Events Office
Emeritus Professor Howard Glennerster FBAESRC
Professor John HillsLSE, Chair
Population structure, 2001 and 2051
0
1
2
3
4
5
6
7
8
9
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90
Age range (lower limit)
Perc
enta
ge o
f pop
ulat
ion
in a
ge ra
nge
2001 population
2051 population
Age distribution of welfare spending, 2001
0
2
4
6
8
10
12
14
16
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90
Age range (lower limit)
2001
spe
ndin
g (£
000s
per
per
son)
Education
Health
Social Security
No Problem!
Demography has a small impact The UK has already taken the
steps necessary on pensions The problem is self correcting
Treasury projections, age related spending(% GDP)
Health
Education
Pensions
L-T care
Other Total
2001/2
6.3 4.6 5.0 0.9 21.7 38.6
2011/12
8.2 5.9 5.0 1.2 20.3 40.6
2031/2
9.3 5.8 5.2 1.2 20.0 41.3
2051/2
9.8 5.7 4.8 1.2 19.3 40.8
Age related spending, % GDP
2001/2 2051 additional
Health 6.3 9.8 + 3.5
Education 4.6 5.7 + 1.1
Long Term Care 0.9 1.4 + 0.5
Pensions and other 65+benefits
5.5 9.1 + 3.6
Total + + 8.7
Our future?
Paying more in tax Reducing mid life consumption
patterns Working longer Getting used to lower incomes in
retirement
A Feasible Future Private saving based on a secure
state platform Base line above means test Higher full pension age Secure against private system and
personal risks Redress gender inequalities in
private schemes
Dutch citizens’ pension Drawn at 65 (women earlier if not
working) Entitlement over 50 years of residence Contributions as a percentage income
tax Pension takes virtually all off means tests Adjusted as wages rise – linked to
minimum wage
Advantages
Incentive to join funded schemes Simple No complex contribution records Does not disadvantage women and
those with limited lifetime work records
Progressive funding
Modifications
Generosity linked to political feasibility Employer contributions could be kept Age at which get pension could be 68 Years to qualify negotiable Pensions needed for those incapable
of full work