In a world of increasingly more negative interest rates, one group is impacted more than most: pensioners who had relied on fixed income to fund their retirement years who are slowly discovering that as pension funds are unable to meet their annual 6-7% return target, that the pensions promised to them will never materialize, or worse be haircut by 50%, 60% or more.

One such example is that of the Central States Pension Fund whose fate we have been following over the past month, and which as we reported yesterday could see the pension benefits for about 407,000 people be reduced to “virtually nothing.”

In a last-ditch effort, the Central States Pension Plan sought government approval to partially reduce the pensions of 115,000 retirees and the future benefits for 155,000 current workers. The proposed cuts were steep, as much as 60% for some, but it wasn’t enough. Earlier this month, the Treasury Department rejected the plan because it found that it would not actually head off insolvency.

In this increasingly gloomy world for retirees everywhere, one person has come up with a modest proposal: the UK’s Lord Jonathan Adair Turner, Baron Turner of Ecchinswell, who based on his title hardly has to worried about his own personal retirement. Turner also happens to be the former chairman of the UK Pensions Commission, and as such his opinion will be closely followed.

What he said is the following: people should work until they are 70 and then be rewarded with a more generous state pension. He was referring specifically to Britons, but the same logic could be applied to the US pension system which is in just as dire shape.

Turner said that reforms to raise the state pension age should be accelerated, with retirement benefits staggered from the age of 65 before the introduction of a larger universal pension from the age of 70 by 2030.

“We have failed to think creatively,” he added.

Actually, no. The world’s central bankers thought very creatively in order to save equity investors around the globe. However, in the process they crushed returns on fixed income products, which are critical in funding and generating the much needed returns for pensioners. Of course, when it comes to actual priorities, the immediate capital gains needs of the 0.1% are far more pressing then long-term retirement benefits of the vast majority of workers, whose problems can be solved as simply as haircutting their promised pension obligations by 60% (or more) or simply by forcing them to work until they die or just before.

Turner also said that under his pension proposals, everybody, including the wealthy, would be entitled to the state pension at 70, but those on lower incomes, or with manual jobs, would be able to draw benefits from 65. “There are people on lower incomes, or have done manual jobs, who are worn out by the nature of those jobs or have been unemployed and don’t have jobs,” he said.

How generous of Lord Turner: to let those who can barely make ends meet work until their traditional retirement age. As for everyone else, i.e., those who make up what used to be known as the “middle class”, they surely won’t mind working another 5 years just to let the world ignore the massive errors compounded by central bankers over the past decade.

“I do not think we have been creative enough about creating two slices [between], 65 and 70 where the state pension is available on a means-tested basis and then at 70 by 2030 where it will be available for everybody on a non-means tested basis.”

Meanwhile, as rates turn even more negative and as both banks and pension funds see their long-short carry “net interest margin” trades lead to no profits (or even losses), the retirement age will eventually be hiked to 75, maybe even 80, and then one day, when virtually all actuarial assumptions go out of the window, and every single pension funds admits defeat, the only logical outcome will be to scrap the entire retirement system and force people to work until they die, just so the S&P can hit new all time highs every year and make a subset of the “1%” richer and richer with time.

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