Too young to die, too old to live

According to the U.S. Census Bureau, between 1991 and 2020, the number of over-60s will grow by 59% in the rich industrial countries, and by 159% in the "less-developed" ones though. There's no question that the population's aging is of major importance, and that it will change the whole tenor of social life health care, the consumer culture, architecture, living arrangements, and even population sex ratios, since women live longer than men. But the real crisis for capitalism and its governments is that the costs of health care and pensions will grow, something that's usually presented as a "burden" on the nonelderly members of society. Older people are not to be cared for, even cherished they're a cost that has to be minimised in the name of fiscal prudence, growth, and productivity. Unless older people are to starve, some provision for their income must be made. In pre -industrial societies, where life is short, people tend to work until they can no longer, and then their families take over. With industrialisation families break apart, and such informal arrangements can no longer be relied on.

According to the doomsters, there are many faults to existing pension systems. Too many of the benefits go to affluent retirees, funds that could be better targeted to the poor; public pensions crowd out spending on other worthy public purposes, like education; the assurance of a reasonably generous income at retirement discourages personal saving; and the retired are essentially a parasitic layer of old folk feeding off the non-old. While a public system may work well when it's young, when the number of contributors greatly outweighs the number of retirees drawing on it, as the system matures, the rate of outgo rises to match the rate of income. "Who pays for what?" This is the central question in public finance. But this one question is actually two questions: "who pays?" and "for what?"

The World Bank, the voice of world capitalism, proposes a three -pillared system. A mandatory public system, financed by tax contributions on a pay-as -you go basis, to provide a minimum floor income for the elderly possibly a single, flat-rate benefit for all. The second is a mandatory pri vately managed system, financed by contributions from either employers, workers, or both a form of forced saving with the accumulating balances invested (Privately management in order to prevent the backdoor nationalisation of the private sector that could occur if public entities invested their funds in the stock market). And the third is a system of similarly invested voluntary savings, also financed by worker and/or employer contributions, but not required by law. The public pillar would assure a minimum income (subsistence) in old age, but nothing terribly comfortable. Comfort would only be achieved through the second and third pillars.

Increasing reliance on private savings, forced or voluntary, to fund retirement takes it on faith that funds invested in the stock and bond markets will magically grow to meet rising needs. Over the very long term, interest rates on long-term bonds average about the same as economic growth rates. Stocks do better than this, but it seems economically unwise to bet that financial asset prices can forever grow more rapidly than the value of the underlying real assets the present and future profits of private corporations they're a claim on.

The Bank's favorite model is Chile yet the Chilean system fails to live up to the Bank's promises. The poorest, supposedly protected by a "safety net," get a payment equivalent to a loaf of bread and a cup of coffee per day. Less poor workers are hardly well taken care of by the new system; it's likely that about half of all retired workers will fall under the official poverty line. Women, with lower wages and longer lives than men, come up particularly short. Administrative costs are far higher than the old public system; investment managers are a lot more expensive than public sector bureaucrats. As with most private pension funds, workers have no say over how their savings are used; fund managers cast the stockholders' votes by their own lights, even though they're really only the workers' agents. In the USA the The National Academy of Social Insurance detailed some options workers could pay more; reduce benefits; reduce the cost of living adjustment; increase the age for full retirement benefits; lengthen the career-earnings averaging period; and reduce benefits for new beneficiaries.

Many call for the raise of the retirement age to 70. This isn't based on any evidence that people are working longer and don't actually need it, but on the fact that people are living longer and draining from the fund longer than in years past. In fact, the real belief is that many who have to retire before 70 will do so for health reasons on truncated benefits and die before they ever reach 70, thus saving the system money. Those few that actually can and do work until 70 will continue to pay into the system, so it's a win/win move. Added to that is the fact that earners in the top half of the economic strata have a longer life expectancy than those in the bottom half and have a far greater chance of making it to 70 and drawing full benefits Another solutions though could be raising the rate of immigration since immigrants (legal or not) tend to be young, and swell the ranks of those paying into the system rather than drawing it down. GDP growth will, since the size of the economy decades hence will determine how much money is available to pay retirees. The bankruptcy scenario is based on an assumption that GDP will grow at a rate seen only in depression decades.

The ones being sacrificed on the altar of economics are society's oldest and frailest, an almost inevitable result of the pursuit of profit above all else in our society..

Some NEST-egg!!

Millions of pensioners are having their weekly income wiped out by basic bills, without a single penny to spare, research revealed yesterday. A typical couple receives a weekly income of £207.15 - but will spend £207.24 on food, fuel, housing and transport, it said. This is before they have spent any money on the long list of other costs, such as a new pair of shoes, a holiday or a present for a grandchild.

Half of workers do not know they could soon be automatically enrolled into a Government-run pension scheme if they are not in a works pension already. From October next year, employers who do not already offer a company pension to staff will have to offer the Government's new savings scheme, known as Nest (National Employment Savings Trust). Unless workers ask to opt out, and provided they are over the age of 22 and earning at least £7,475, they will have money deducted from their salary each month to go into Nest. It means that from next year, someone earning £22,000 a year, and eligible to save via Nest, will see £56 deducted from their monthly pay. Nest is clearly going to take a few people by surprise,' says Ian Martin, director at HSBC.

What also will come as more of a shock is that around 40 per cent of bosses will cut or freeze their workers’ salaries when new pension rules are introduced next year, a report warns today. The rules will force every boss in Britain to pay into a company pension for each of their workers for the first time in history. They will be required to pay the equivalent of at least 3 per cent of a workers’ salary into a pension. But the report, from the Institute of Directors warns employees’ salaries could be ‘hit’ as bosses resort to desperate measures to try to recover the money lost on the extra pensions bill. When asked how they will find the money, 33 per cent said they plan to ‘freeze’ salaries and 9 per cent said they will ‘decrease salaries.’

And for those already in a works' pension, the UK's 6,533 defined benefit pensions, including final salary schemes, had a collective surplus of just £2.3 billion at the end of April, down from one of £45.5 billion in March. New accounting rule slashed £43billion off pension funds - because of worries that we are living too long. If the accounting assumptions had not been changed, pension funds would have ended the month £37.2 billion in the black. The accounting shake-up came despite the fact that the total value of schemes' assets rose by 1.5 per cent to £1.003 trillion during the month on the back of stock market gains. The overall rise in life expectancy is being driven by fewer people taking up smoking, and healthier lifestyles in general.

http://www.thisismoney.co.uk/money/pensions/article-1724831/Are-forced-pension.html

grey poverty

The fact that 3.7 million older adults do not have sufficient cash income to meet their basic expenses too often escapes attention of the media. AARP’s Public Policy Institute produced an interesting report on the older American population.

Nearly one in ten adults age 65 and above live in a family with income below the official U.S. poverty line, or federal poverty level (FPL).Today, nearly 3.7 million older adults (9.7 percent of adults age 65 and older) live marginally above the poverty threshold (between 100 percent and 125 percent of the federal poverty line), and 2.6 million have incomes between 125 percent and 150 percent of the federal poverty line. Overall, 36.2 percent of older adults, or 13.7 million adults age 65 and older, have low income—defined as 200 percent of the FPL.

In 2008, an adult age 65 and older living alone was counted as poor if his or her annual cash income before taxes was below $10,326. An elderly couple with income below $13,014 was counted as poor. Nearly one in six older adults was poor or near poor, with income below 125 percent of the FPL, and about a third had low income—below 200 percent of the FPL. The official U.S. poverty measure has been in use for more than four decades, but increasingly, it fails to accurately describe who is and who is not poor, and it does an especially inadequate job of measuring the extent of poverty among older adults. Nearly twice as many adults age 65 and above are poor when newer measurement approaches are used.The official poverty measure describes the number and percentage of people who have pre-tax cash family income inadequate to meet their most basic needs for shelter, food, and clothing. Constructed more than four decades ago—and adjusted only for price inflation since then—the poverty measure is widely regarded as out-of-date. Recent efforts to measure the income needed to pay for ordinary expenses find that the income needed for a decent standard of living is significantly higher than the federal poverty level (FPL).

59 percent of poor older adults depend on Social Security for all or nearly all (90 percent or more) of their family income.Details describe the fact that twenty percent of older adults who are black or Hispanic are poor, and poverty hits older people with limited education and those who are not married especially hard. Most poor adults age 65 and older are not married—either widowed (43 percent), divorced or separated (19 percent), or never married (8 percent). Older women of color are especially likely to live in poverty. Nearly a quarter of older women who are black or Hispanic are poor, and more than a third are poor or near poor (with income below 125 percent of the FPL).

In 2008, 22.1 percent of low income elderly households (with incomes below 130 percent of the poverty line) were “food insecure” (they had limited or uncertain availability of nutritionally adequate and safe foods or limited or uncertain ability to acquire acceptable foods). This is a substantial increase from 2006, when 17.6 percent of the very low-income elderly had low or very low food security.Moreover, in 2008, roughly 10 percent of low-income elderly households had very low food security: They not only had limited or uncertain availability of food, but they ate less than they felt they should, cut the size of meals, or skipped meals in three or more months during the year.

Poor older adults tend to be in worse health than adults who are not poor. They tend to have more chronic and disabling health conditions. Poor health and disability, on top of very limited income and inadequate insurance protection, mean that health care costs are a burden for many poor older adults.

Housing takes an even bigger bite out of the incomes of poor older adults. Housing costs absorb more than 30 percent of income for 80 percent of poor older households.

As the previous post explains the worst poverty is usually suffered by those who for some reason such as old age or racial descriminatin but we all suffer poverty , some perhaps worse than others but the cure is to tackle the root cause , to recognise to solve one person's poverty is to deal with everybody's ragardless of individual degree .