Letter: 'Golden age' of the friendly societies was a time of hideous suffering

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The Independent Online
Sir: Promoting revamped friendly societies, Keith Joseph says 'No actuary will contest that NI contributions would accrue far better benefits if placed in the investment markets'.

Maybe. In 1971, Keith Joseph issued a White Paper proposing a new state pension scheme with its contributions placed in the investment markets. Frank Redington commented: The aim of funding is admirable; it is to make real investments to underpin promises which have to be honoured later. However, it is an illusion to believe that a compulsory increase in savings creates more investment. It does not. Industrialists build factories because people are spending, not because they are saving.

Later, in 1977, he said: Nowadays we realize that the scheme would have been a disaster and I still tremble to think that we were saved only by the accident that the Conservatives lost the 1974 election by a whisker.

Redington was one of the leading actuaries of this century. His full arguments are subtler, requiring more space than a Letters page. I commend them to your readers, and to Lord Joseph in particular.

Yours sincerely,



2 February