The Daily Telegraph has, I suspect, “sexed up” its report on a Hewitt Associates study of the effect of Britain’s coming smoking ban on pension costs.
Hewitt Associates, a human resources group, said the ban, which is expected to encourage around 600,000 of the nation’s 13m smokers to quit, will substantially increase people’s life expectancy and therefore their pension costs.
Figures compiled by the company show an average improvement of just one year in life expectancy will increase the average deficit of the FTSE 100’s pension funds by £15 billion to £20 billion.
And the increase in annual pension costs could reduce profit before tax for the FTSE 100 companies by around £1 billion ayear. . . .
Kevin Wesbroom, a Hewitt Associates pensions consultant, said: “The numbers do highlight just how sensitive profit and loss charges, deficits and hence cash funding requirements are to assumptions made about future morality rates.
“Companies and Trustees that are responsible for defined benefit schemes need to recognise that this announcement is likely to affect the company’s financial statements as well as how their schemes are funded.”
An overall one-year life expectancy increase from a five percent reduction in the smoking population is implausibly huge, but the general point is a good one. Smokers are, on the whole, an economic boon. Harvard Law School Professor Kip Viscusi’s empirical studies make that claim unarguable. For example,
To be sure, smokers do incur higher medical costs—about five cents per pack in Massachusetts in the mid-1990s. Yet, because smokers have a shorter life expectancy than nonsmokers, smokers incur a cost of 11 cents per pack less in nursing home costs and nine cents per pack less in pension costs. On balance, smokers incur about 14 cents less per pack in costs paid by Massachusetts, while contributing an additional 51 cents per pack in excise taxes.
That doesn’t mean that we ought to encourage people to light up, but it does suggest that the smoking habit harms only its victims, not society at large. Why, then, is there such fervor to stamp it out?
My theory is that mankind labors under an Iron Law of Puritanism. The quantity of busybody interference in other men’s lives is a constant. It can be redirected but not diminished. Since society no longer feels inclined to discourage adultery, promiscuity, homosexuality, pornography, vulgarity, public indecency, etc.,the impulse to control others’ lives has migrated to a minor personal pleasure. Once tobacco is stamped out, I wonder what the next target will be.
First they came for the smokers, but I didn’t complain, because I don’t
But what did it matter? My pension plan was broke, and I couldn’t afford to go on living.
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