The Pension Commission chaired by Adair Turner has estimated that, on current projections, by 2050 there will be a shortfall in pension provision equal to 4 per cent of GDP. A key factor has been the dramatic decline in the contribution made by employers, through the closure of occupational schemes and a host of measures that limit tax revenues available for public provision.

Blackburn argues for an alternative way to reverse this retrenchment by imposing a new compulsory share levy, calculated as a percentage of annual profits. The shares would be held by a new network of publicly controlled Pension Reserve Funds, who would use their dividend income to fund a new layer of universal and redistributive pension coverage.

Blackburn calculates that a share levy set at just 10 per cent of annual profits would allow the Reserve Funds to accumulate investments worth £1 trillion by 2031 and generate an income equivalent to around 2 per cent of GDP - half the funding gap identified by Turner.

The new public funds could also use the voting power of their shares to promote good corporate governance, executive pay restraint and socially responsible investment.

Blackburn writes:

"Corporations depend hugely upon the great benefits and privileges they receive from their host society. They benefit from public expenditure on health, education and transport. They benefit from law and order. They enjoy many of the advantages of personhood while being shielded by special legal
immunities. All these condiderations argue for obliging companies to make a significant contribution to the pension deficit problem."

"I concede that the measures I propose have a sweeping and radical character. But I doubt that anything much less will suffice to tacklee the simultaneous crisis of public and private pension provision we now face. In my view robust proposals for reform should help us to pay decent pensions, not furnish excuses for removing pension rights to which many have contributed all their lives."

The full document is now available to download free of charge at
http://www.catalystforum.org.uk/pubs/paper31.html

"A really big idea, a great contribution to the debate we need" - Rodney Bickerstaffe, speaking at the Norman Melbourne and Barry Amiel Memorial Lecture (available on CD from http://www.oakleaf-recordings.org.uk)

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'Plugging the gap
How employers can help to fill the pension deficit'
By Robin Blackburn

A Catalyst Working Paper
Published in June 2005

ISBN 1 904508 15 4
38 pp
http://www.catalystforum.org.uk/pubs/paper31.html

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