Letter Published in the Financial Times – Ros Altmann

    Ros is a leading authority on both private and state pensions,annuities and
    retirement policy. Numerous major awards have recognised her work to
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  • Ros Altmann

    Ros Altmann

    Letter Published in the Financial Times

    Letter Published in the Financial Times

    Letter Published in the Financial Times – June 2003

    by Dr. Ros Altmann

    (All material on this page is subject to copyright and must not be reproduced without the author’s permission.)

    The Editor
    Financial Times
    Number One
    Southwark Bridge
    SE1 9HL

    25th June 2003


    Reading Joseph Danahoo’s incisive comments on Baby-boomers, self
    interest and cost transfer (Letters, June 25th), I was struck by the
    parallels one can draw with the UK’s final salary pension system. The
    grand idea of funded schemes has not worked. Surpluses were not built
    up enough while schemes were immature and investment returns strong.
    These surpluses should have been left to grow, keeping the funds ready
    to pay increasing numbers of pensions as more workers retired.

    Unfortunately, these surpluses were whittled away. Government taxed
    them, employers used them to fund industrial restructuring and took
    contribution holidays. Politicians kept piling on huge extra costs,
    which are not sustainable in the long run. Instead of a funded system,
    we now have a situation where schemes are generally using today’s
    contributions to pay generous benefits to today’s pensioners. There is
    a real danger of running out of funds before today’s younger workers
    retire. But senior decision-makers are hoping their own pensions can
    be secured before everyone realises this.

    Our funded system has become more like ‘pay-as-you-go’. In fact, if
    you are worried that your employer may fail, or may not be able to
    afford the long-term commitment, it is perhaps more like

    Ros Altmann
    Governor London School of Economics

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