P J R M I

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M O R G A N A To: House of Commons
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I T ´ S A B O U T B A L A N C E London
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A To: The Rt Hon Elizabeth Truss MP, the Chief Secretary to the Treasury.
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Regarding: Pension Reform and Treasury Efficiencies.
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Thursday, 28 March 2019.

I am a freelance macroeconomist who develops new tools and policies, aiming to provide
governmental efficiencies. A large amount of my work involves pension reform, which I use
to attain macroeconomic targets. I have enclosed three articles relating to pension saving, the
first article explains how pension saving is used as a macroeconomic tool, the second article
explains how a freeze on pension saving can act as a governmental emergency fund and the
third article puts forward an optimal pension saving model for Treasury cost efficiencies.

Kind Regards.

Peter James Rhys Morgan.

Copyright © 2019 Peter James Rhys Morgan.

PJR Morgan: Website: morganisteconomics.blogspot.com
Pension Pumping.
Published at Morganist Economics.
By Peter Morgan.
19:35 01/03/2019.

Prologue; The article below explains the technique developed to use pension saving as a
macroeconomic tool, in a effort to control inflation or deflation at the same time as providing
governmental cost efficiencies. The method uses alterations in annual pension contribution
allowances, which are usually exempt from income tax, to impact aggregate money supplies.
Decreases in lifetime pension saving allowances are not supported by Morganist Economics.

Although Morganist Economics put forward the below technique called 'Pension Pumping' it
did not support the cuts in the lifetime taxation exempt pension allowance, which has
occurred in recent years. The intention of the pension reforms recommended by Morganist
Economics was to change the way pension schemes were paid into to maximise Treasury
efficiencies and control the circulated money supply, without diminishing tax exemptions.

Pension schemes are a method of investing to provide an income in retirement, when the
individual has reached an age when they are no longer capable of generating an income from
working. Investment in private and occupational pension schemes is encouraged in most
countries to support the cost of dependents in their retirement, it minimises the expense to the
state if funds are provided by the individual themselves rather than the government solely.

Incentives to invest in private and occupational pension schemes vary, however most nations
will offer pension tax reliefs. Income tax relief in particular, when the investment the
individual or employer pays into the pension scheme is exempt from income tax, boosts the
size of the asset portfolio. There are usually limits to the level of tax relief pension schemes
can receive, in the UK there is an annual contribution allowance and a lifetime tax allowance.

Pension tax relief and the method of contributing into pension schemes has become a key
cornerstone in the Morganist school of economic thought, as a macroeconomic tool. The
paper 'The Pension Problem' developed in 2006 by Morganist Economics put forward the use
of pension saving as a mechanism to control inflation instead of an interest rate increase, as a
result of dire consequences of high interest rates used to control inflation in the early 1990's.

As a result of the development of pension tax relief as a macroeconomic tool, in particular

alterations in the annual contribution allowance to control inflation, significant pension tax
reform has occurred within the UK. In addition to the inflationary or deflationary control
benefits changes in the annual pension contribution allowance enabled substantial taxation
savings to be achieved, without impacting the overall lifetime pension taxation allowance.

Although the original intention of 'The Pension Problem' was to control excessive inflation,
the economic environment necessitated deflationary control. Instead of increasing the annual
pension contribution allowance to expand pension saving and dampen consumption, which
should decrease inflation, the annual pension contribution allowance was reduced to give
consumers greater spending power, this compensated for lost demand and stimulated growth.

Copyright © 2019 Peter James Rhys Morgan.

PJR Morgan: Website: morganisteconomics.blogspot.com
The decrease in the annual pension contribution allowance lessened the expense to the
Treasury by reducing the allowable income tax exemption, this meant the government had to
borrow less money to fund itself saving on the cost of debt interest. Although it would seem
to have cost the pension saver taxation benefits initially, the opportunity to make up for lost
annual pension contribution relief is enabled by later payments to hit the lifetime allowance.

After tremendous lobbying from Morganist Economics the technique of reducing the annual
pension contribution allowance to control deflation and make Treasury cost efficiencies,
through deferring taxation exemption payments, has become a successful macroeconomic
tool. The technique was also used to stimulate economic growth to support the UK economy
during the global deflationary period seen over the last decade, with minimal consequences.

Although pension saving and pension tax reliefs differ from one nation to another, the simple
methodology of decreasing the annual allowable pension contribution, whether the pension
receives tax relief or not, will increase the availability of funds for consumers and should
stimulate economic growth. If pension tax reliefs exist, as long as the lifetime allowance
remains constant annual contributions can be deferred to gain the full lifetime tax exemption.

This technique which I call 'Pension Pumping', can provide economic growth without having
to alter interest rates or the set annual taxation rates. The method is one of efficiencies and
rearrangement of funds to minimise the cost of borrowing for governments, in addition to
controlling aggregate money supplies or aggregate prices. It was a proven success in the UK
over the last decade, demonstrating sustainable economic growth and stable rates of inflation.

Copyright © 2019 Peter James Rhys Morgan.

PJR Morgan: Website: morganisteconomics.blogspot.com
Pension - Annual Contribution Freeze.
Published at Morganist Economics.
By Peter Morgan.
13:42 11/03/2019.

The annual pension contribution is the allowable payment into an accumulated pension fund,
which will provide an income in retirement. The size of the payment can vary from one year
to another, which can provide many advantages to the pension saver and the economy too. A
freeze or block on pension payments for one year or more could become an economic tool.

As there is a lifetime pension tax exemption allowance in addition to the annual pension
contribution tax exemption allowance, if there is a period the pension saving is prohibited the
lost tax relief can be restored by later annual contributions. Although the annual pension
contribution allowance has reduced in recent years a full annual block has not yet occurred.

There should be no long term consequence to an annual pension contribution freeze, as long
as the lifetime pension allowance is maintained and the payments can be deferred to a later
date. This makes an annual pension contribution freeze a potentially effective economic tool
due to its limited impact on the wider economy, which is not seen with interest rate changes.

By freezing the annual pension contribution the allowable investment into a pension scheme
will fall giving the saver more disposable income. This increase in spending power should
support the rate of consumption and help to stimulate economic growth in a recessionary or
deflationary period, this is particularly useful during a short term money supply retraction.

'Credit Crunches' and tightened credit conditions require increases of money supply or at least
additional available funds to support consumer consumption, business operations and enable
an increase in trade. The newly available unsaved annual pension contributions provide this
desperately required stimulus, which may be hard to find elsewhere without consequences.

There will also be a short term rise in tax intake through not having to pay tax relief on the
annual pension contribution, due to the frozen payment. Although the tax payment will have
to be made at a later date, if the lifetime pension allowance remains the same, there will be a
saving in government debt interest payments, generated through lesser short term borrowing.

The funds made available to the government by freezing the annual pension contribution,
which is like guaranteed interest free short term borrowing, can give the government
additional income when it is difficult to get it elsewhere. The freeze could offer a temporary
emergency fund for extreme economic turmoil, unexpected natural disasters or a war chest.

According to the UK Inland Revenue's website and the published PEN 6 'Cost of Registered
Pension Scheme Tax Relief' document the cost of pension tax relief per year is made up of
£38,600 Million Total Reliefs less deductions of £13,500 Million plus National Insurance
Relief of £16,200 Million, which generates a total of £41,300 Million a year (February 2018).

The cost of pension contributions to the Inland Revenue in lost income tax is £41.3 billion a
year. Although it would have to be paid back, assuming the lifetime allowance increases and
in line with inflation, contribution freezing offers guaranteed short term borrowing for the
Treasury, which is great for funding emergencies, economic growth and 'Credit Crunches'.
Copyright © 2019 Peter James Rhys Morgan.
PJR Morgan: Website: morganisteconomics.blogspot.com
Optimal Pension Saving.
Published at Morganist Economics.
By Peter Morgan.
20:55 15/03/2019.

Arguments are made for the best method of pension saving, however, the logical choice to
make is the most stabilising to the economy, most cost efficient in reducing lost Treasury tax
intake generated by pension tax relief and most generous in terms of the maximisation of the
saved funds in the pension scheme, which will be made available to the saver at retirement.

Most economists aim to provide slow stable growth within an economy over a long period of
time. It is usually aimed to avoid the high peaks in growth, which often bring about inflation,
called 'Booms' and the low troughs during a recessionary period, which often bring about
deflation, called 'Busts', this is referred to as the 'Boom - Bust' business or economic cycle.

Optimal pension saving should achieve slow and steady rates of economic growth, the
monthly or annual pension saving contributions should not push the economy into the
extreme 'Boom - Bust' cycle and may even be able to stabilise the economy if controlled
correctly. This can be enabled by evenly distributed monthly or annual pension contributions.

Smaller annual pension contributions will enable greater available funds for consumption,
which will help to stimulate economic growth. This can be a valuable tool in a deflationary or
recessionary period when greater spending is required, if managed correctly the monthly or
annual pension saving allowance can be used to support or stabilise economic growth rates.

Optimal pension saving will reduce governmental liability for pension tax relief, which can
save short term borrowing needs and the cost of interest on debt repayments in short less
borrowing and less interest to pay. The rearrangement of the pension contribution monthly or
annual saving allowance enables an optimal short term government borrowing mechanism.

Smaller annual pension contributions will lead to a lesser need for short term governmental
borrowing, as money is saved through lower pension tax relief payments, reducing the cost of
governmental debt interest payments. The optimal pension saving methodology for reducing
the cost of government borrowing is smaller regular annual or monthly pension contributions.

Optimal pension saving to maximise the funds invested by the saver for their retirement,
decreases the cost of the elderly to the state by reducing financial dependency. The aim is for
the saver to reach the 'Full' lifetime pension taxation exemption allowance or to at least
maximise saving through the pension income tax relief facility to increase retirement income.

The most efficient methodology of achieving the three targets of optimal retirement pension
saving, which are stable economic growth, government borrowing efficiencies and pension
fund maximisation, is to set the pension saving period to be over a twenty five year (25 years)
timeframe then calculate the optimal annual contribution or lifetime allowance on this basis.

The twenty five year pension payment period is the time used in the Morganist Optimal
Pension Contribution Calculation. It can either be led by the lifetime allowance, lifetime
allowance (LTA) divided by twenty five equals the annual contribution allowance (ACA)
(LTA / 25 = ACA), setting the pension investment rate over the total pension saving period.
Copyright © 2019 Peter James Rhys Morgan.
PJR Morgan: Website: morganisteconomics.blogspot.com
Or led by the annual contribution allowance, annual contribution allowance multiplied by
twenty five equals the lifetime allowance (ACA * 25 = LTA), setting the pension saving rate
at an annual level, which enables an altering lifetime pension allowance. This may provide a
more flexible lifetime allowance, which alters as the annual contribution payments change.

For example, in the UK for the year 2018/2019 the annual pension tax relievable contribution
allowance is £40,000 and the lifetime pension allowance is £1,030,000. A annual contribution
of £40,000 led lifetime allowance, multiplied by 25 years, equals £1,000,000 LTA. A lifetime
allowance of £1,030,000 led annual contribution, divided by 25 years, equals £41,200 ACA.

Next year the lifetime allowance rises to £1,055,000, if this is divided by 25 years the annual
contribution allowance rises to £42,200. If the next year becomes the 'Pension Tax Relief
Base Year' the annual and lifetime pension allowances of all future years will rise at 'Real
Terms', in line with inflation, which is a 2 percent increase, if the inflation target is achieved.

If the last three years of the pension saving period allow a double annual pension contribution
taxation exemption it could enable deferred payments to reach the maximum pension lifetime
allowance. This would provide flexibility in the pension investing process and encourage late
starting pension saving, which will reduce levels of dependency on the state in retirement.

As long as the lifetime allowance remains the same, at real terms (in line with inflation), the
annual contributions can change without costing the saver tax relief. Slow 'Stable' or 'Gradual'
economic growth, governmental debt interest repayment efficiencies and pension saving fund
maximisation have been achieved, with additional flexibility in annual pension contributions.

By using the Morganist Optimal Pension Contribution Calculation, the pension investment
process has become optimised and the flexibility of annual pension contribution payments
allow inflationary or deflationary conditions to be controlled. It will also enable emergency
economic stimulus if needed or an emergency short term borrowing fund to be available.

Copyright © 2019 Peter James Rhys Morgan.

PJR Morgan: Website: morganisteconomics.blogspot.com