In many industrialized countries, the elderly population is growing more rapidly than the total population. This is partly because of historical movements in the birth rate

(‘baby booms’) and partly due to the fact that people are now living longer on average. Because the elderly are eligible for state retirement pensions, this places an increasing burden on the working age population to pay for those retirement pensions. Discuss the merits of each of the following proposed policies for dealing with this problem. Which do you think would be the best policy or combination of policies? Explain.

a. Making exempt from income tax any money paid into a private retirement pension fund.

b. Making exempt from income tax any money paid into a private retirement pension fund so long as the person involved gives up his or her right to a state pension.

c. Reducing the amount of state retirement pension by 50 per cent.

d. Raising the minimum age of retirement from 65 to 70 years of age.

e. Raising the basic rate of income tax.

f. Raising the higher rate of income tax.

g. A drive to increase immigration in order to increase the working age population.