Insight - Death and taxes.

(From Financial Director)

Byline: Anthony Harrington.

It should have been obvious to a blind man. When the government set up a Pensions Commission with a brief that included looking at the adequacy of the current voluntary contributions regime, you just knew it was plotting a new stealth tax - for our own good, of course.

In realpolitik terms, you don't challenge a voluntarist regime unless you are already fairly convinced that the only way out from under the pensions burden for the state lies in a compulsory regime.

We make this point without wishing to impugn the excellent work of Adair Turner, Jeannie Drake and John Hills. All three have been intimately concerned in their careers outside the Pensions Commission with those who are likely to suffer most from inadequate pensions provision, and their integrity and commitment to the job is clearly beyond reproach. However, everyone knew before the Pensions Commission turned the first spade in its initial, mammoth, fact-gathering exercise that Britain is in very deep trouble on the pensions front.

Turner provides us with a stark, meticulously researched and hefty wall of facts to make this point. In 1950, men who had reached the age of 65 could expect to live another 12 years. Today, that figure is seven years more: a 65-year-old will have another 19 years ahead of him (most of that increase has taken place since 1980). By 2050, the average pensioner male could expect to reach 92.7 years before shaking off this mortal coil, and who knows where this mortality creep will end?

To this, one must add the fact that the population is slowly but steadily declining. We need 2.07 babies per woman on average for a stable population, while Turner cites the government actuary's findings that the figure looks like settling down at 1.7 for decades to come.