Who’s going to pay our pensions in 20-30years if the UK keeps its birth rate low and also restricts immigration?

[AlertEagle]

posted from another forum
Serious question. The UK’s birth rate is well below replacement level, meaning fewer young people entering the workforce. At the same time, the political mood seems pretty anti-immigration, even though immigration is one of the only things that’s kept the tax base stable.

State pensions are paid by current workers’ National Insurance contributions, not some magic fund. So… what happens when there’s a huge retired population and not enough working-age people to support them?

Will the government raise taxes, increase the retirement age, cut pensions, or eventually U-turn on immigration just to prop things up?

Feels like a ticking time bomb no one’s really addressing. Curious what others think, is anyone actually planning for this?

Or are we as a nation willing to give up state pensions if it means less immigration?

#childfreegeneration

Saw this hashtag on a tiktok and just laughed. How dumb and short sighted. Of course no one should feel bad about not having kids and no one should feel that they have to have kids but we do have to acknowledge as you say that a steady population level is needed now for the benefit of future generations.

Raise pension age
freeze tax brackets
eventually means test

Denmark are going for 70 state pension - other countries will think if they can we should or have to

basically it should be 12 from avaersge life expectancy

you want to retire earlier you will need to fund it

and raising the bar for disability payments is the first step - do that first so it’s work or job sealers then raise pension age

maybe if they made equity release on property a bit more fair rather than private banking making the t&c criminal? People could opt to fund from that

don’t you think if the pension age keeps increasing many of us won’t live to pension age at all.

The pension age will keep increasing to reduce the cost to the state, along with means testing the core state pension.

The introduction of auto-enrolment is to move away from a universal provision model, to individual investment.

I am under no illusion I will be receiving any state pension at all.

Need the cash to house and feed them

we can migrate a younger generation from revealing countries as climate change is making more places too hot to survive

movement of the populations

it’s not a problem - except people mean white babies don’t they?

Yes

and some will live to 95 and get 25 years

luck of the draw

Probably.

But the expectation people will have a state funded pension for 20+ years of retirement is something that has crept up over recent decades, that it’s a ‘reward’ for working and paying tax during their working life.

Whereas that wasn’t initially the point. It was just to stop absolute destitution.

We need to move away from current workers paying it, and the money accrued go into an investment fund instead. Our current model was somewhat short sighted.

People are also living longer and are more "fit" later into life because of health care

So a higher pension age

It'll level itself off eventually anyway because there also then won't be such a big number of people needing their pension paying and the wave will likely have gone back to higher child birth again

immigration doesn’t Actually solve this problem, as immigrants tend to adjust their birth rate to that of the host country (ie they tend to have one or two children too). Then we have 5 million more people, so we need to bring in 10 million more to pay their pensions, then … the solution, if you like immigration, is to have guest worker visas for fixed time periods but with no entitlement ever to citizenship or indefinite leave to remain. If you don’t like immigration it is to increase the pension age, increase private pension saving vs state and abandon the triple lock.

I am not sure why prople are asking about funding. No one. I think most of us under 40s are quite clear that we will go from office to coffin... And no, it's not just our fault because we have less kids.

If we didn’t have to pay for the teen’s uni, and find £1,000s for a house deposit, and put £1,000s a year into pension we could spend loads in the economy

but we do, previous generations didn’t
and future generations will have to self fund more - hence fewer and fewer babies

I don’t think they will means test pensions unless it is ridiculously high, telling the population the more tax you pay the less you are going to get on that scale would be political suicide

but removing other pension benefits - freezing pension credit as pensions rose until it disappears - reducing tripe lock to an average could mean inflation effectively reduces pensions in real cash terms

no point worrying about it - just save some so you are not entirely at the mercy of state age and pension

pensioners won’t be destitute just might have to live off the basics, if just state pension, it’s for sustenance not luxury

Retirement will be only for those who can afford it.
I do worry about paying for generation 'rentirees', who will need substantial handouts to cover their rent, even if they continue working into their 70s.

They have already raised the retirement age.

Incidentally, for 2023 (which I just happened to check just now out of curiosity) there were 581,363 deaths and 591,072 births, so there were 10k more births than deaths that year. That same year there were 1.2 million immigrants.

We cannot continue to increase the population of this small country ad infinitum. The human population globally is on the verge of being unable to sustain itself, and if it continues to increase like that, then there will come a time when there will be global food shortages.

I think there has to be an absolute pension education drive. I think a lot of people my generation (30's) are not educated about what we can do now to ensure we a) have a private pension and b) make our money start to work. Far too many are throwing their hands in the air thinking the state pension will cover them or think whats the point in saving into a private pension. Sacrifice isn't the right word but far too many of our generation are using disposable income for short term pleasures such as cars on PCP or expensive phone contracts. When actually a secondhand car or a plan with less data would be sufficient, that money can be used behind the scenes to help the future. I'm not talking about those struggling mouth to mouth each month but those on decent salaries with potential to save.

My husband (early 40's) pays a financial advisor to handle his pension. So far its doing really well and has allowed us to think how else can we make our salaries work to retire earlier and last to whatever the state pension age will be. As well as increasing my pension I am currently looking into ways we can chip at the mortgage to get it paid off quicker without any additional outlay. It won't be much but at 60 with 5 years left or whatever wishing I'd overpaid somewhere in the past.

Oh no! My pyramid scheme! Who will keep it going?

I agree with this. I don't believe that anyone has the right to sit around and be economically inactive for 20 odd years of their life just because they worked for 40 years or whatever. I doubt I'll have the stamina to teach until I'm 70 but I'm sure I'll have the brainpower to do a less strenuous job when I'm older.

Why not incentivise higher payment into private pensions?

Not sure about means testing state pension but things can be done to motivate saving, through tax change

The problem with raising state pension age is that you will just have loads more people in their 50's and 60's claiming out of work benefits and disability benefits as they already do so still not really going to be affordable. I work in benefits for over 50's and there are already large numbers claiming because they have health issues or because they lose their jobs and can't find alternative employment at that age.

@Whatshesaid96 You and your DH are in the fortunate position of being able to invest in your pensions. A lot of people don't earn enough to be able to afford to do that. They don't have any disposable income to lock up in long-term investments or pension plans, they need it to live on.

It’s already incentivised through tax relief - still doesn’t seem to make much of a difference

I work in benefits for over 50's. There are so many pensioners currently who have barely worked their whole lives ( I appreciate things were different years ago especially for women). Many others retired at 60 and have been claiming state pension and pension credit, etc for 25/ 30 years.
I think it will get to a situation where the whole benefit system collapses eventually apart from maybe a very basic amount to live on if you genuinely have nothing else.
So many older people claiming Attendance allowance and all the extra pension credit etc that comes with that, so many people going into Pension age on PIP which can be up to twice that of AA. There just aren't the tax payers to fund it all for many more years. Add into this that many of today's young people will never be able to get on the housing ladder so unless we start building some more social housing pdq there will need to be funded with housing benefit when in their pension years as a modest private pension and possibly no state pension is not going to fund extortionate private rents for 20/30 years of retirement. Ticking timebomb unless someone makes some difficult decision soon.

Oh yes definitely I agree. I did mention in my post that I was referring to those who have disposable income and not those living pay check by pay check. I do strongly believe that there should always be a safety net for those that struggle in terms of a state pension, pension credit and WFA for example. However there are an awful lot of people with disposable income who do bury their heads in the sand and think that the state will cover them in retirement. That is despite having had the means for decades in taking care of it.

Exactly and people claiming universal credit, their earnings are taken into account after private pensions have been deducted to incentivize them and mean they aren't penalized for saving.

It will clearly be the case that out of work benefits will be less and that fewer people will be assessed to be in need of them.

If people don't have any means of supporting themselves though they will still have to be provided with money to live off and rent paid unless we are going to see large numbers of people starving and on the street. maybe family will have to step in more.
I see so many people currently trying to survive on very basic UC. The rent element does not cover their private rent, they need support with council tax etc. they can't find jobs, even graduates and healthy young people are struggling to find jobs at the moment let alone those in their sixties and if the pension age rises into their seventies.