Debate Magazine
Policy Exchange have 'done a Demos'. Their new report rides the old Help to Save - Defusing the pensions time bomb bandwagon. This meme/myth is based on people's complete and utter lack of understanding of the fundamental difference between businesses investing (A Good Thing - increases productive capacity) and households saving (on balance A Good Thing, but only up to a point, household saving does not in itself increase productive capacity and might even reduce it). They also gloss over the fact that there is a limited amount of interest or dividend yielding assets for people to invest in, so it is physically impossible for all pensioners to end up with at least £9,000 in private pension income. So what it boils down is the usual "we want the government to take a large chunk of your salaries and give it to the boys in the City, who will use it to chase up share prices and push down bond yields. "After having taken a massive cut for themselves, the net benefit to you poor deluded savers overall will actually be negative. "And there's a bonus! The more of your salary is taken away now, the longer it will take you to pay off your mortgage! Win-win!" Let's just see who's behind it, shall we? About the Author James Barty is the Senior Consultant, Financial Policy for Policy Exchange. Prior to joining Policy Exchange he worked in the financial sector for more than 20 years, including 17 years at an investment bank and four years at a hedge fund. Acknowledgements We would like to thank all of the people who have taken the time to talk to us about this vital issue. The feedback we have received has been invaluable and we have tried to incorporate it into the report. We would particularly like to thank Alan Brown and the Global Strategic Solutions team at Schroders who kindly provided a considerable amount of input and help to us in the research and writing of this report.
