Importantly, we need to...
Prohibit Government Pension Funds from Playing on the Stock Market.
Public pension funds should not be subject to the volatility and fluctuations of the stock markets where only a small amount of business is related to raising money -- which happens when new companies are put on the stock market -- and where the majority of business is speculation.
Establish a National Savings and Investment Pensions Fund.
This will fund pensions through the proceeds of local investment. It has been called a "People's Pension Fund" and it links pensions with local investment in public services.
Money paid via National Insurance payments will be ring-fenced and invested in national assets such as building infrastructure, and not on the stock market. This will boost the economy and help to generate economic activity, which will in turn generate money to pay the pensions in the future. This productive money is safe from the uncertainties of the stock market. and is not subject to the ups and downs of the stock market.
This could be a way out of the pensions crisis plaguing the UK. Devised by Richard Murphy, Colin Hines and Labour MP Alan Simpson, it proposes a new framework for pensions, based on investment in public infrastructure projects and services, which is currently not an option for UK pension funds.
As Richard Murphy says, "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 per cent 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 will also mean that the current annual £16.5 billion of state subsidy for
pensions, most of which is now gambled, is better used."
Colin Hines says, "What we are providing here is 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.
A People's Pension Fund that could be invested in health, transport, education,
sustainable energy and social housing projects -- depending on the investor's
choice -- would provide the double benefit of 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."
You can get a copy of the report by contacting,
the New Economics Foundation,
3 Jonathan Street, London, SE11 5NH, Tel: 020 7820 6300 or you can download it free