Sleaford-upon-Sea and the future none of us wants

The year is 2100. Earth is approaching a peak population of 9.5 billion people. Despite some notable progress in decarbonising our activities and more progress on carbon capture of various types than expected 80 years ago, overall we have not managed to shift much off the Intergovernmental Panel on Climate Change (IPCC) middle-of-the-road shared socioeconomic pathway (SSP2). Some countries have done much better than others, with income inequality a problem both within and between them. Carbon emissions stayed fairly level until 2050 before starting to fall, but net zero has still not been achieved.1

Temperatures have risen by 2.7 degrees compared to pre-industrial levels. Africa has split between a north which has seen a recovery of rainfall and a south which is no longer habitable for humans. The Indian monsoon rains have failed. The Himalayan glaciers providing the waters of the Indus, Ganges and Brahmaputra, the Mekong, Yangtze and Yellow rivers have reduced by 90% from their pre-industrial levels.

The Amazonian rain forest basin has dried out completely. In Brazil, Venezuela, Columbia, East Peru and Bolivia life has become increasingly difficult due to wild fires. Drought is now permanent in the sub-tropics and Central America. Australia has become the world’s driest nation.

In the US Gulf of Mexico high sea temperatures drive 180+ mph winds.2 Flooding is widespread with sea levels having risen by 0.6 metres on average compared to 2020.3 Many plant species have become extinct as they were unable to adapt to such a sudden change in climate.

Food prices continue to soar, with temperatures, droughts and the inundation of arable land adversely affecting many crops. Massive migrations have led to increasingly severe military and police responses from the most popular destination countries. There is fear that we have not yet seen the end of the terrible costs of climate change, with temperatures continuing to rise.

England has a new Eastern coastline, which became a certainty once the decision was taken that the cost benefit analysis did not justify the expense on the massive coastal defences which would have been required to prevent it. Sleaford is now a seaside town. Birmingham is the only major city which has not been significantly affected by sea level rise4 and there are calls for the capital to be moved there. However London hangs grimly on following the failure of the Thames Barrier in the 2040s. An Intertidal Property Pricing Index (IPPI) has sprung up, which sucks in money as investors bet on the development opportunities in the aftermath of the catastrophe.5

This, or something like it, is the future we are currently on track for but none of us wants. So let’s change the trajectory.


  1. The IPCC’s SSP2 narrative description.
  2. Mark Lynas, Six Degrees: Our Future On A Hotter Planet, Harper Perennial, 2008 for the scientific consensus at the time on the consequences of 3 degrees warming
  3. (accessed 5 July 2023)
  4. (accessed 5 July 2023) for the maps of England following 2.7 degrees warming by 2100 following current trajectories
  5. IPPI borrowed from Kim Stanley Robinson’s depiction of a future New York after two pulses totalling 15 metres (50 feet) of sea level rise in New York 2140, Orbit, 2018

We have become the nightmare vendor

For those of you who have ever bought or sold a house (and I realise that that is a dwindling proportion as we move down the age ranges), it occurred to me that the UK increasingly resembles the worst kind of vendor. The sort that removes the lightbulbs and the doorknobs before giving up possession.

Harold Macmillan referred to Margaret Thatcher’s Government “selling off the family silver” in response to the widespread privatisations of public assets at the time. This Government has gone further, denying funding to the health and social security safety net we all rely on to such an extent that, as Health Equity in England: The Marmot’s Review 10 Years On found in 2020:

  • people can expect to spend more of their lives in poor health;
  • improvements to life expectancy have stalled, and declined for women in the most deprived 10% of areas;
  • the health gap has grown between wealthy and deprived areas; and
  • living in a deprived area of the North East is worse for your health than living in a similarly deprived area in London, to the extent that life expectancy is nearly five years less.

However it is even worse than that. I once bought a house from a man who had done all of his own plumbing, despite being a telephone engineer. He proudly took me up to the airing cupboard, where the boiler room displayed piping of complexity which would not have been out of place on a nuclear submarine.

“Everything has its own stop cock.” He said. He might even have called them isolation valves. I just thought of how many different leaks were possible from what he had constructed.

And so it proved. We had a plumber on speed dial before long and, with every new job he undertook for us, most of which was to undo the “work” of which the former owner had been so proud, he used to intone “what a man”, more to himself than to us.

Brexit, even as its architects start to disavow it in the face of the increasingly overwhelming evidence of the bullet holes in our own feet, is our home-made plumbing. And I am sure that there are any number of people around the world, looking at us and intoning “what a man” to themselves. It no longer matters to most of us how much the Brexiteers think they have buffed up their sovereignty isolation valves. Every week brings a new story about another leak of what Macmillan endearingly referred to as our “treasure” that it has enabled.

On immigration, we are like that house on the street which noone from the area wants to go anywhere near. Neighbours only reluctantly enter into any kind of dispute about who should replace the shared fence. There is a huge-sounding dog which barks at you fiercely if you venture up the driveway, on which the only car is on bricks. It feels like, if we were to ultimately die as a nation, noone would notice for years until the smell coming from inside became too much for anyone to ignore any more.

Anyway, enough of all that. I am off to the Hay Festival tomorrow for my annual infusion of ideas, erudition and words just flowing all around me. And so I must leave you with a book recommendation. I will be taking The Golden Mole by Katherine Rundell with me, a brilliant beautifully illustrated book (illustrations by Talya Baldwin) with each chapter focused on a different endangered species. Sounds bleak? No! The writing is so good that you are soon just overwhelmed by the richness you hadn’t even been aware of and might otherwise never have been. I have been reading it very slowly as I really do not want it to end. As Katherine says about The Human at the end of the book, with a different take on treasure:

For what is the finest treasure? Life. It is everything that lives, and the earth upon which they depend: narwhal, spider, pangolin, swift, faulted and shining human. It calls out for more furious, more iron-willed treasuring.

I have this book because Katherine described it so compellingly in an interview at the Hay Winter Festival (a smaller one in November each year). She has also written a book about John Donne, the metaphysical poet, called Super-Infinite. I had not considered until now that I was remotely interested in John Donne, but I also cannot imagine that the week will pass without me buying this and reading it too.


I recently finished reading Chasm City by Alastair Reynolds, which I highly recommend. In it, sufficiently rich people have been able to buy a programme of treatments which make them immortal. Not that they can’t die, but they needn’t if they’re careful. Good science fiction, I thought.

Then I read Paul Kitson’s (the new UK Head of Pensions Consulting at EY) piece on LinkedIn where he wrote (bold mine):

Pension schemes, corporate sponsors, members – everyone, in fact – must now contend with a forward looking plan that (somehow!) considers on one side the possibility of future pandemic outbreaks shortening life expectancy, and on the other side the many £billions being spent on ‘regenerative medicine’ (AKA “the ending of ageing” or “escape velocity for death”!).

So perhaps not entirely, I thought.

In Chasm City, the immortals who live in “the Canopy” have two main problems:

  1. Hanging on to their wealth and, if possible, increasing it, as forever is a long time to finance.
  2. Boredom.

One particular group amuse themselves by hunting poor people in “the Mulch” (lower level where the poor live). Others indulge in increasingly dangerous pastimes to inject some urgency into the otherwise featureless expanse of their lives. No wealth moves from the Canopy to the Mulch, not even in a trickle.

I am just finishing Do Androids Dream of Electric Sheep by Philip K Dick (a classic, I know, but I hadn’t read it before, although I have seen Bladerunner). One of the features of the post-apocalyptic world of 1992 described are “mood organs” which allow you to dial up a given mood at any time, eg 481 is “awareness of the manifold possibilities open to me in the future” whereas 888 is the desire to watch TV, no matter what’s on it. Again, good science fiction, I thought.

Then I read a piece in this months’ Actuary magazine called Apt apps, about doctors being recommended by NICE to offer patients with insomnia the Sleepio app as an effective and cost-saving alternative to sleeping pills. So perhaps not entirely, I thought.

The first book was written in 2001 and the second in 1968, so it would seem that lead times are variable.

Both books deal with the fragility of identity, whether via memory implants and religious viruses in Reynolds’ book or how we go about separating androids from people from “chickenheads” in Dick’s. The divisions between the life experiences of the different groups are so stark, but it is the characteristics of the people in them which takes up everyone’s time and attention in both books, rather than the structure of the societies which create such extreme winners and losers. Which suddenly doesn’t feel like science fiction at all.

Meanwhile what has happened to England’s life expectancies by decile of deprivation in the last 10 years?

Source: ONS

So not quite immortality yet at the top, but inequality is clearly worsening in life expectancy. The Government Actuary’s Department gave an upbeat view last year on what the impact of the recent Levelling Up White Paper might be. Others are upbeat too.

However the Government’s track record is not good on inequality. Sir Michael Marmot produced the Marmot Review on health inequalities in the UK in 2010 and then followed this up with a review of what progress had been made 10 years later. As he points out in his recent interview in The Actuary:

Health spending fell from around 42% to 35% during the 2010s. He notes that this reduction was carried out in a regressive way: “There has been a 16% reduction in health spending for the most affluent, but a 32% reduction for the most deprived groups.” In addition, he says, while unemployment fell over the course of the decade, the income of employed people also went down – so the proportion of people living in poverty rose, as did child poverty.

These are the kinds of interventions that matter for most people rather than sleep apps or regenerative medicine to achieve escape velocity from death. And they are definitely not science fiction.

Fiscal space

NASA, ESA, and the Hubble Heritage Team (STScI/AURA), Public domain, via Wikimedia Commons

Fiscal space is defined as the difference between a nation’s sovereign debt-to-GDP ratio and the limit beyond which the nation will default unless policymakers take fiscal steps that are outside of anything they have done historically. That limit is sometimes referred to as the fiscal cliff, just to ram home the imagery of fixed physical limits beyond which disaster beckons.

How much fiscal space does the UK have? Moody’s have an answer, which depends most heavily on when you ask the question. In September 2019 it was as follows:

This shows the UK with a fiscal space (the “dynamic” means they assume interest rates increase as borrowing does, due to “crowding out” arguments – ie government borrowing pushing up the price of borrowing for everyone – so beloved of most economists) of around 175% of GDP, with this then projected to fall over the following 5 years as rates “normalized”. While the cost of borrowing seems to be dynamic, the actual borrowing itself is not allowed to be in these calculations – it is assumed that they just add to debt without increasing the revenue components of the primary balance.

Well of course then we had 2020, at which point (June 2020) Moody’s appear to have stopped talking about fiscal space and instead are now focusing on something called “debt affordability”. What happened to dynamism and crowding out? Not explained:

However despite this triumph of debt affordability, they then produce another graph to indicate that governments still need to be bearing down on debt to GDP ratios:

As they say in the document “rating implications will depend on governments’ ability to reverse debt trajectories ahead of potential future shocks”. Remember this was in June 2020. Let’s also remind ourselves of another graph:

Requiring governments to reverse debt trajectories in this environment is insane and likely to result in more deaths if not ignored. However as recently as last month in their issuer comment for the UK they said:

However, compared to the government’s March budget (that was quickly overtaken by events), there are some initial signs that fiscal policy outside of investment is likely to be less expansive than previously announced. What remains unclear is whether this ambition will be able to withstand the political pressures that seem to be inevitable given the government’s previous commitments. Even before the Spending Review, longer-term spending commitments for health, education, and defence had already been announced. Together, these three areas account for around 60% of total expenditure.

I have been hard on Moody’s in this piece, they are most certainly not alone. But this attempt to divorce sovereign debt levels from what is actually going on in countries needs to stop as does the constant discounting of the value of any government spending at all. Political pressures to spend more on health and education are not always things that governments need to “withstand” in order to look good in a Moody’s graph. There are far more important things at stake.


NEW versus England and Wales – an update

I previously wrote a blog in 2013 based around the Office for National Statistics (ONS) statistical bulletin entitled Estimates of the Very Old (including Centenarians), 2002-2011, England and Wales, which summarises how the proportions living to 90 years old and above have changed since 1981. It showed us a population living within a population: Nonagenarian (ie the over 90s) England and Wales (NEW) within the full population of England and Wales. I thought it might be time for an update, based on the latest ONS bulletin from September 2020, which now covers the period 2002-2019.

There have been quite a few changes. There are still more women than men in NEW, although the overall ratio has reduced from 2.7:1 in 2011 to around 2:1 in 2019 (see below). The NEW population, which was somewhere between the sizes of Malta’s and Cape Verde’s full population in 2011, has now just passed that of Western Sahara and has its sights firmly set on passing Luxembourg’s population next.

The population of NEW is still growing far more quickly than that of England and Wales, or indeed the UK, with a 25% increase between 2011 and 2019. However, with the NEW population you need to look beyond just improvements in public health and medical advances to the time at which they were being born. For instance, the number of people alive at almost every age from 90 years and above was higher in 2019 than in 2018, but with by far the largest increase at age 99 years (62.2%). This was caused by a big increase in births from the second half of 1919, compared to the previous year, as a result of the end of World War 1!

The bulletin ends with a sombre reminder that, although we would normally expect the large increase in those aged 99 years in 2019 to translate into a record number of centenarians in 2020, other factors, particularly the COVID-19 pandemic, are likely to have had a significant impact. COVID-19 deaths are highest for the 85 years and over age group. Public Health England have calculated excess deaths in the over 85 population at 11,656 between 21 March and 18 December 2020 (with 13,844 categorised as COVID deaths, suggesting a drop in excess deaths from other causes). This compares with the 2019 NEW population of 605,181, an increase of 21,157 on 2018.

A possible manifesto for the next generation

I am an actuary. I have worked for over 22 years either in, or serving in some capacity (apart from the two years I spent learning to be a teacher), the finance industry. I spent the 12 years before that mostly either bringing up children or writing unpublishable novels, with some early career experiences in the security printing industry thrown in which I thank principally for teaching me early that no way of doing things is for ever. Seven of my former employers no longer exist, mostly swallowed up in subsequent corporate transactions. I am increasingly convinced that a “career” like mine is no longer possible for the next generation, and my most recent evidence for this is based predominantly on two excellent books.

The first is The Finance Curse by Nicholas Shaxson. This demonstrates, convincingly, that a huge part of our current malaise as a nation, whether it is the loss of control over our own affairs, or the current, Victorian, levels of inequality or the fact that we don’t appear to invest in any of things we need to prosper as a society any more, can be traced back ultimately (sometimes via very cunning circuitous routes) to the Faustian pacts the City of London have lobbied the rest of us into with the rest of the world.

The second is The Pinch by David Willetts (and link to his slides – one of which is shown above – on it from 2015 here), whose central argument is that we are not attaching sufficient value to the claims of future generations, and that this is an intellectual failure of my generation: the one that spawned both me and Boris Johnson. I will declare an interest here: David is Chancellor at the University of Leicester, where I work as an actuarial science lecturer, in addition to all of his many other achievements and will be speaking at the Leicester Actuarial Science Society on 11 March on intergenerational fairness linked to a new edition of his book.

So for any highly talented twenty-somethings looking to make his or her mark in the world (and I have been privileged to meet and teach many of you over the last few years), I would, very hesitantly (because you probably don’t need me of all people to be giving you an agenda), suggest that the following things might be a priority for your generation:

  1. Don’t be distracted by the short term. Most people now want action on climate change, for instance, which has been delayed to a ridiculous extent by our inability to place sufficient value on the needs of future generations. Most of the things worth working towards and campaigning on are long-term problems with solutions which require long-term patient consensus-building. Our generation have been unable to do this seriously, yours cannot afford to be so distracted.
  2. Stay focused on the big issues: What is the proper allocation of wealth between the generations? Most of the problems we fixate on, like obesity or anti-social behaviour or credit card debt are just symptoms of the breakdown of the inter-generational contract which the baby boomers (because we felt that we could do so because of our greater numbers) have visited upon our societies. We have then presumed to pass moral judgement on the generation we have so comprehensively wronged, which is of course an easier message for many in our generation to hear but is one of the main reasons we have become too distracted to deal with the big long-term issues that we face as a society.
  3. Don’t make it all about good guys and bad guys. It is easy to vilify individuals in this great inter-generational psychodrama that we have all been living through, and it might make you feel momentarily more empowered or encouraged as a result, but in the long term the power is with you anyway and you will be more effective if you make it about good and bad systems. Good systems pursue the interests of our own people, whereas bad systems pursue the interests of people who need to be persuaded to invest in our society but have no real long term interest in doing so: ie other societies who clearly need to prioritise their own people’s needs and tax avoiding multinational companies and individuals.

I would like to finish with the concluding sentences of The Pinch:

The modern condition is supposed to be the search for meaning in a world where unreflective obligations to institutions or ways of doing things are eroded. The link between generations past, present and future is a source of meaning which is as natural as could be. It is both cultural and economic, personal and ethical. We must understand and honour those ties which bind the generations.

In the nine years since The Pinch was published we have done the very opposite of honouring the ties which bind the generations. We must hope that the generation following us have more wisdom.

Actuaries and Climate Change

The Institute and Faculty of Actuaries (IFoA), through its Actuarial Research Centre, is inviting research teams and organisations to submit proposals for a research project on modelling pension funds under climate change. The research is intended to address the need for pensions actuaries to understand the potential magnitude of climate change impacts, and hence if and when climate change might be relevant to the funding advice they give. What areas in particular might be useful to look at through the lens of a pension actuary?

The current concentration of carbon dioxide in the Earth’s atmosphere is around 400 parts per million by volume (ppmv), or a little over 140% of the generally accepted pre-industrial level of 280 ppmv. What level we can cap this at depends on how we respond in every country in the world. There are therefore many opinions about it:

Source: IPCC AR5: Fig 2.08-01 

Here RCPs stand for Representative Concentration Pathways, and are meant to be consistent with a wide range of possible changes in future anthropogenic (i.e. human) greenhouse gas emissions. RCP 2.6 assumes that emissions peak between 2010-2020, with emissions declining substantially thereafter. Emissions in RCP 4.5 peak around 2040, then decline. In RCP 6.0, emissions peak around 2080, then decline. In RCP 8.5, emissions continue to rise throughout the 21st century. What this means is that the best we can hope for now is a scenario somewhere between RCP 2.6 and RCP 4.5, with the US Government’s Environmental Protection Agency appearing to believe that RCP 6.0 is the most realistic scenario. As you can see, RCP 4.5 assumes an eventual equilibrium at around 500 ppm, or about 180% of pre-industrial levels and RCP 6.0 an equilibrium at around 700 ppmv, or about 250% ppmv.

Equilibrium climate sensitivity is defined as the change in global mean near-surface air temperature that would result from a doubling of carbon dioxide concentration. A doubling of the pre-industrial level to 560 ppmv (ie between the RCP 4.5 and RCP 6.0 assumption) has been projected to result in a range of possible outcomes:

Source: IPCC 2007 4th Assessment Report, Working Group 1 (Figure 9-20-1)

This is certainly a bit of a we know zero kind of graph, but has worryingly fat tails indicating reasonable chances of 10 degrees plus added to average global temperatures. To put this in context, let’s use the approach taken in Mark Lynas’ excellent “Six Degrees“, where the combined research into the effects of each additional degree above pre-industrial global temperatures is collated to allow us to view them as distinct possible futures. Some examples are as follows:

One degree

We are nearly here (around 0.8ᵒ so far):

  • Return of the “Mid-west American dust bowl” but with greater vengeance
  • Increase in hurricane activity
  • Loss of low lying islands, eg Tuvalu

Two degrees

The “safe” level we are trying to limit increases to:

  • Release of greenhouse gases begin to alter the oceans. May render some parts of southern oceans toxic to Ca CO3 and thus to one of life’s essential building blocks, plankton.
  • Heatwaves like 2003 which killed 35,000 people in Europe and led to crop losses of $12 billion and forest fires costing $1.5 billion will occur almost every other summer.
  • Crippling droughts can be anticipated in Los Angeles and California
  • From Nebraska to Texas the anticipated drought would be many times worse than the 1930s “dust bowl” phenomenon.
  • Polar bears would probably become rapidly extinct.
  • Mediterranean countries will become drier and hotter with significant water shortages.
  • IPCC estimate sea level rise of 18 to 59 cms.
  • Monsoons would increase in India and Bangladesh leading to mass migration of its populations.
  • International food price stability will have to be agreed to prevent widespread starvation.

Three degrees

  • Africa will be split between the north which will see a recovery of rainfall and the south which becomes drier. This drier southern phase will be beyond human adaptation. Wind speeds will double leading to serious erosion of the Kalahari desert.
  • Indian monsoon rains will fail. ·
  • The Himalayan glaciers provide the waters of the Indus, Ganges and Brahmaputra, the Mekong, Yangtze and Yellow rivers. In the early stages of global warming these glaciers will release more water but eventually decreasing by up to 90%. Pakistan will suffer most, as will China’s hydro-electric industry.
  • Amazonian rain forest basin will dry our completely with consequent bio-diversity disasters
  • Australia will become the world’s driest nation.
  • New York will be subject to storm surges. At 3° sea levels will rise to up to 1 metre above present levels.
  • In London, a 1 in 150 year storm will occur every 7 or 8 years by 2080.
  • Hurricanes will devastate places as far removed as Texas, the Caribbean and Shanghai.
  • A 3° rise will see more extreme cyclones tracking across the Atlantic and striking the UK, Spain, France and Germany. Holland will become very vulnerable.
  • By 2070 northern Europe will have 20% more rainfall and at the same time the Mediterranean will be slowly turning to a desert.
  • More than half Europe’s plant species will be on the “red list”
  • The IPCC in its 2007 report concluded that all major planetary granaries will require adaptive measures at 2.5° temperature rise regardless of precipitation rates. US southern states worst affected, Canada may benefit. The IPCC reckons that a 2.5° temperature rise will see food prices soar.
  • Population transfers will be bigger than anything ever seen in the history of mankind.

Three degrees obviously needs to be avoided, let alone ten, but the problem is that business as usual for the finance industry may not be the way to get there. As some recent research has suggested, financial market solutions to environmental problems, such as carbon trading, may be ineffective. As the authors state: By highlighting the tenuous and conflicting relation between finance and production that shaped the early history of the photovoltaics industry, the article raises doubts about the prevailing approach to mitigate climate change through carbon pricing. Given the uncertainty of innovation and the ease of speculation, it will do little to spur low-carbon technology development without financial structures supporting patient capital.

Patient capital is something developed economies have been seeking for some time, whether it is for infrastructure investment, development projects or new energy sources, and no good way to create it within the UK private sector has been found yet, including various initiatives to try and get an increase in pension scheme investment in infrastructure projects. It therefore seems to me to be the wrong question to ask what impacts climate change are likely to have on the assumptions used for pension scheme funding, when it is the impact of the speculation which pension scheme funding encourages which is one of the main drivers of our economies towards the worst possible climate change outcomes.

A more productive research question in my view would be to bring in legislators and pensions lawyers as well as environmental scientists and others researching and thinking in this area alongside actuaries to look at how we could change the regulatory framework within which pension scheme funding and investment within other financial institutions where actuaries are central takes place. There is already research into what changes may be necessary to international law to reflect the new Anthropocene era the planet has entered, where the dominant feature is the impact of human activity on the environment. In my view this should be extended to the UK legislative and regulatory landscape too.

Pensions and the Zombie Apocalypse

If the models are correct we are heading for a Zombie Apocalypse

Let’s forget the strapline of this blog for a moment and assume that the models are correct. The Pension Protection Fund (PPF) is targeting “self-sufficiency” by 2030, ie no more levies from sponsors of pension schemes required for it to independently fund all the future benefits of every scheme member whether they are already in the PPF or going to end up in it with only the insufficient assets their former employers allocated to their former pension schemes for company. BHS has concluded a very high profile deal in the last couple of weeks to set up a new self-sufficient scheme for its former employees. The Universities Superannuation Scheme (USS) has proposed a funding plan which targets self-sufficiency less a “covenant” (ie amount of money feasible to get out of the university sector in the future) by 2031. John Ralfe mentioned a few other examples in his article from 2015.
These are schemes which have been dubbed “zombie” schemes on the basis that they are basically dead, with no new money or new members coming in, but nevertheless dragging themselves along the floor year after year until all of their members have stopped twitching.
What does the UK pensions world look like in 2030? Well according to various sources:
• UK population will have increased to 70.6 million (assuming Scotland and Northern Ireland are still in it) with 21.4% of them over the age of 65 (S&P)
• Credit rating of UK will have fallen to A, with a further fall to BBB by 2035 assuming no change in economic policy (also S&P)
• Average life expectancies at birth in UK would be over 85 for women and 82.5 for men (Imperial College and WHO)
• Benefit outgo from defined benefit pension schemes is £100 billion more than contribution income pa (Hymans Robertson)

This does not sound like a happy place for our zombies to be negotiating with the occasional limb getting torn off as multiple doors are slammed in their faces. Although the self-sufficiency route is now a common approach amongst large schemes, it is largely untested. No scheme as far as I am aware has actually managed to run in a self-sufficient manner for any appreciable length of time, whereas the more expensive buy out route (where the benefits for members are purchased in the form of contracts with an insurer) is by comparison well established.

So off into this volatile landscape our zombies will be let loose, trying to run themselves like little insurance companies, but without the scale or diversification or experience which makes insurers (mostly) survive for long periods. However that better track record comes at a price which schemes are currently reluctant to pay. There is a good chance that this experiment will not end well.

My guess for 2030? That the volatile landscape will have claimed some casualties amongst the self-sufficient zombies and put them into the PPF with much bigger deficits than if they had gone there straight away. And then all the other zombies will T-U-R-N A-R-O-U-N-D V-E-R-Y S-L-O-W-L-Y and follow them there. At which point the PPF will realise that they are undead no longer.

I don’t know who the winners and loser of the 2050s will be and neither do the PPI

For a brief period this week, before the Panama leaks brought everyone back in the room, one of the BBC’s main headlines was that a change to the UK State Pension was projected to make around three-quarters of people currently in their 20s and two-thirds of those currently in their 30s worse off than under the current arrangements. Figures of £19,000 and £17,000 “over the course of their retirement” were bandied around.

The reason the analysis had been carried out by the Pensions Policy Institute (PPI) was that the Department of Work and Pensions (DWP) is required to carry out an impact assessment of such proposed changes and had given the PPI the task.

First of all, the full summary of the analysis, coverage of which on the BBC has at least started to become a little more measured by today, is as follows:


As you can see, the numbers that came out were weekly losses of up to £17 per week for some groups and weekly gains of up to £13 per week for others. These numbers were themselves based on complicated projections about how benefit changes would be phased in and also how much the State Second Pension would pay people many decades into the future (the DWP paper can be found here). They were then aggregated by multiplying by the number of weeks in retirement until the pensioner was expected to die, based on the current State Pension Age timetable and the principal projections from the ONS 2015 Life Tables. The total amounts expected to be paid to people in retirement, however, were not (for those in their 20s this would be around 24 x 52 x 155.65 (the start rate for the new State Pension) as a minimum = £194,250 in 2015 terms). Neither was any explanation made of just how many years people were being projected to live. For £17 a week to translate into £21,000, the person currently in their 20s will need to be in retirement for nearly 24 years. It is not clear exactly when this person is expected to retire: the current tables only go up to a date of birth of 6 April 1978 (when State Pension Age is expected to be 68) with a vague intention to increase it to 69 by the late 2040s. An assumption of a retirement age of 69 looks consistent with the projections, which indicate a life expectancy at that age of 22.95 years for males and 24.81 years for females born in 1995.

And that last bit leads me on to why this particular news story is in my view just foolish. I tend to get a bit crotchety whenever anyone projects anything as a fact to a date beyond my personal life expectancy (less than 33 more years, according to the ONS). We are talking about people being worse off in the 2050s and 2060s. Here are a few more projections for you with those kinds of timelines:

  • World population will be 9 billion by 2050 (UN – currently it’s 7 billion)
  • Total energy demand in CO2 equivalent doubles from current levels by 2060 (IPCC)
  • Banking assets in London exceed 9 times UK GDP by 2050 (Mark Carney, Governor of the Bank of England)
  • 60% of government bonds across all countries will be classified as junk by 2050 (Standard & Poors)

The vast majority of people are going to be better off who retire in the next 15 years (at least in terms of their State Pension), as will most people retiring in the decade after that. Beyond that we are in the region of the unknowable – almost certainly a very different-looking world which will have required several further adjustments to state pensions before we get there. So please let’s not waste time having foolish arguments about made up winners and losers.

Kurt Vonnegut – The Shapes of Stories

I wanted to share this lovely account of Vonnegut’s story shapes because it is one very powerful way to categorise different outcomes and, as such, potentially a very interesting way of illustrating them and their implications. I feel sure I will be returning to this theme soon.

Kurt Vonnegut - The Shapes of Stories

From Visually.