Private pensions and public greed

Socialists loathe everything private except parts, provided they are surgically interchangeable.

Labour economic policy

Such is the nature of socialism, and it’s easier for a tiger to turn into a cuddly kitten than for a socialist to support individual autonomy.

When you strip it of its mendacious share-care-be-aware jargon, socialism of any kind tends towards Mussolini’s terse formula: “Everything in the State, nothing outside the State, nothing against the State.”

All modern states gravitate towards this ideal, and their proximity to it defines the type of their socialism. It could be national, international, democratic – almost any modifier will do. But what matters there isn’t the adjective but the noun: socialism.

Its ultimate desideratum is always the same: shifting power from the individual to the state. If the individual still retains some control of his own destiny, it’s only because the state hasn’t yet found a way of stepping in.

In that context, private pensions are a glaring anachronism. If his private pension fund is big enough, the holder will be independent of the state in his later years. If it’s really big, the holder can even retire early, thus slipping out of the state’s clutches when he still has a long life ahead of him.

Yet this anachronism, defying as it does every instinct of our socialist state, used to thrive in Britain. Call it a throwback to sanity, but we used to have excellent provisions for private pensions.

Our state pension is the most miserly in Western Europe, and even at its maximum level it can’t provide for dignified existence. But when people and their employers pay into a private pension fund, the contributions are exempt from taxation, up to certain, quite sensible, limits.

That way, a responsible person on a middle-class income can retire comfortably by keeping up his maximum contributions for, say, 30 years. That, as far as the state is concerned, makes him a fish slipping out of the net. The holes in the net must be way too big.

Thus, when Tony Blair became prime minister in 1997 and started his offensive on traditional Britain, plundering private pensions was his top priority and the first thing he did. His chancellor Gordon Brown immediately imposed a £5.6 billion annual tax on pension funds.

He then boasted that his government “lets people keep more of their money”. First, that was untrue. Second, that was an unequivocal statement of tyranny: you can let someone keep only what’s legitimately yours.

Brown’s statement must be complimented for its honesty, or cynicism if you’d rather. For any socialist (meaning, any modern) state, our money isn’t really ours. It belongs to the state, which can then decide how much of it we’ll be allowed to keep for our families. The bandit raid on pensions was a practical expression of that principle.

As Keir Starmer prepares for government after 13 years of Labour Lite (aka Tory) rule, he lets it be known that Blair’s appetite was far too suppressed. He is planning to force pension funds to transfer 5 per cent of their capital (some £50 billion as things stand) into a so-called ‘growth fund’.

This will be supposed to be used for aggressive investments, and if you believe that, there’s a bridge over the Thames I’d like to sell you. In fact, socialist bureaucrats will have a new pot of money at their disposal, which they’ll be able to dole out as they see fit. It doesn’t take a flight of fancy to realise they’ll use it to feed public – which is to say the state’s – greed.

They’ll be unaccountable to the individual contributors, who will have no say in, nor any knowledge of, how their money is spent. In other words, this is another plundering raid on individual autonomy.

Private pension is a major bugbear of socialists, but not the only one. Inheritance tax is another. The whole idea of dynastic continuity is abhorrent to lefties, and they hate every manifestation of it, from hereditary aristocracy passing titles down the line to wealthy families doing the same with capital.

(This overlaps with their other pet hatred, for the family. The modern state correctly identifies it as its competitor and will do anything to weaken the institution. Inheritance tax thus joins homomarriage, easy divorce and incentives for single motherhood in the arsenal of modernity.)

That’s why the Blair government banned most hereditary aristocrats from the House of Lords, an outrage the subsequent ‘Conservative’ governments have done nothing to correct. And that’s why all our socialist governments, whatever they call themselves, try to push the inheritance tax threshold down.

At present, any inheritance in excess of £325,000 is taxed at 40 per cent. Now, any inheritance tax is immoral – a family is made to pay another tax on money that has been taxed already. But moving from the general to the specific, this threshold is dishonest even on its own terms.

For most British families, property makes up by far the greatest part of their inheritance. And property inflation in the UK outpaces money inflation by a factor of 7, in London as high as 10.

It’s not unusual in London for old people subsisting on meagre income to be living in houses they bought for a pittance 50 years ago, which are now worth a million or more, sometimes much more. That means the sum their heirs will have to pay in inheritance tax will be several times greater than the original cost of the house, inflation-adjusted.

How does the government justify this highway robbery? The answer is, it doesn’t have to – any more than a fox has to justify killing chickens. That’s just what it does.

Starmer is hatching similar plans for capital gains tax, which requires no additional comment. It’s the same combination of greed and powerlust, or rather greed as a mechanism of powerlust, same as with private pensions and inheritance tax.

Hence we should never take on faith any government moaning about the high cost of social care and the dependency culture it fosters. The modern state wants people to be dependent on it for their livelihood – the more the merrier. Every person caught up in the dependency net increases the state’s power, every person slipping out reduces it.

That’s all the state needs to know, the only motive it needs to act. I’ve used a couple of zoological metaphors already, so here’s another: such is the nature of the beast.

6 thoughts on “Private pensions and public greed”

  1. State caused inflation is another (indirect) way to keep retirement savings down. Ask me how I know.

    I remember reading in a blog some years ago that the idea behind taxes on “the rich” was just to punish people who are successful. It has nothing to do with helping those less fortunate. Now, where exactly did I read that?

      1. I would, but I enjoy it so. Can I admit that whenever there is a two or three day gap in entries I wonder if something may have happened to you?

  2. A married couple have a combined IHT allowance of £1m, if they are including their primary residence in their estate.

  3. USA the wanted to either have a one time [sure!] tax on all private retirement accounts or merely [merely?] seize all accounts. From the former they could balance the budget for one year only. With the later they could eliminate the national debt. But after a year the problem with being able to balance the budget and stop accumulating a national debt would just start all over again.

    If your account seized rely upon [sure!] the government to issue a yearly stipend adequate for your needs with true equality and fairness.

    For some reason I am so skeptical.

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