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?

I agree. People complain on here about anyone who says they put more into their pension in order to get free hours as if they’re cheating the system, but it’s literally exactly what the gov wants you to do. They could change that loophole easily, and save on the free hours funding, but they really want people to save into their pensions!

We never recovered from 08 and the can was kicked down the road. Little investment by governments & business and now the shit is hitting the fan. Add in the ageing population and the future is indeed bleak

I don’t have any figures to hand, but I would have thought that financial situation influences the number of children people have,

@ThatBoldBear finances definitely impact whether people have dc or not but I believe the thinking is once society gets to a certain point any attempts to incentivise more dc & increase birth rates have not had any real impact.

Does it matter? You have (or haven't) set aside money for your retirement. Your call.

But I have. I started thinking about my pension in 1990, 35 years ago because I was self employed, and I have planned and considered all the angles ever since. I made decisions in 2003 and have lived with them. George Osborne's chancellorship was an unexpected boost. And now, another Chancellor wants to rewrite the rules to get more money out of the people who have made preparation for retiring without needing state funding to pay for all the passengers. I haven't thought it through completely, but my instant reaction is that I can pay tax elsewhere. I am quick at languages and eg Portugal taxes pension income at 7-10%. Of course, one would need to pay health insurance premiums as well, but it sounds like a cheap and appealing option.

Interesting. Would you say we are at that point?

I think the only developed country that has above replacement birth rates is Isreal but theirs has never dipped below.

yeah, this has certainly changed people’s behaviour. But in reality, whilst it might change how much you contribute to a pension, people who are worried about IHT are not going to be destitute in retirement. They might just save the money in other ways with a view to doing more gifting.

We're also having less kids because those of us who work, can't afford childcare...
In my area (go SNP!) the only people eligible for free/significantly subsided childcare are those who are on 'don't work' benefits...
But as is oft stated on here, those who work and contribute to tax are meant to be 'so so happy and grateful' to pay a wack of tax so that the lazy and feckless can have all the dc they want (state funded), while not being able to afford dc themselves, and if this is questioned.... the mn response is 'YOU WANT THE POOR TO STAAAARVE AND BRING BACK THE WORKHOUSE!!'...🙄

I think the focus will transfer gradually to private pensions.

I'm 62. I started paying 3% into a private pension when I was 22, so 40 years of paying in either 3% or 5% (and a very short period paying 7.5%). My salary has always been about twice national average.

That has created a pot of about £420k. The money was invested during the global crash and during covid so it hasn't been all plain sailing.

I still have another 5 years to work. I think it will eventually give me a pension of between £18k and £20k per annum. I had one maternity leave, otherwise working solidly full time for 39 years.

So if someone did the same on average salary, I guess they would end up with about £210k in today's money, or a pension of about £9k-£10k p.a.

It's not much, is it ! 🙁

Omg, clever you, you've totally baited me into wasting my time doing that because otherwise I'm eprried you'll thinking a thicko.

Good old reverse psychology!

Who knew you were asking a faux-naive question?

The ones getting pension credit end up better off than those with a small private pension. All council tax paid, rent paid , opticians and dental paid etc. Such an unfair system.

The IFS have done an interesting podcast on pro-natal policies and @duvetsmuvet is right - they don’t really work (even when very generous).

Interesting. Would you say we are at that point?

Well we are below replacement rate which seems to be the bit you can't reverse once you get to that point.

There was a really fascinating article someone linked about South Korea (I can never find it) and how the society has changed and children are almost an annoyance. The presence of child free zones eg cafes, mothers having to travel miles to maternity centres.

Omg, clever you, you've totally baited me into wasting my time doing that because otherwise I'm eprried you'll thinking a thicko.

I'm not quite sure what you are saying here but interesting that you still can't find the time to link any evidence to your claim that the "vast majority of immigrants are a net drain on the public purse"

@Icanttakethisanymore I will look out for that, thanks

Agree with the German national health service model. It’s much like Guernseys
We might get an uptick in the number of physicians / 10,000 population like Germany.

I am a bit of a pioneer socially. 1956 born, first gen university educated. I had no intention of having a family at all, until I was 42. And a week later I was pregnant. Lucky? Massively. Now 69, I am working quite actively to ensure that a very substantial part of everything I have earned over 40 years of work ends up in asserts owned outright by my DC.

TBH, if you have not done the same for your children, then you need to start thinking NOW how you might give them an advantage. Because whatever MN and SM tell you, clever hardworking people end up with better outcomes.

here it is -

https://podcasts.apple.com/gb/podcast/ifs-zooms-in-the-economy/id1511294104?i=1000676221323

I framed the episode incorrectly, it’s about the uk’s demographic challenges but it talks about other countries pronatalist policies within that.

Initially, though, they do have more children and they are immigrating with qualifications that we haven't paid for, and their own children are more likely to do well at school and become hefty tax payers.
So on balance it probably isn't a bad idea - it provides taxes for pensions now, and fills skills shortages, and then the younger generation is integrated into British society, whereas if you just have worker visas, they might have children here that are in school, but then we get continuing successive waves of people who aren't invested in the UK and don't integrate.
Research shows that language skills are good if you work in your new language (or go to school in it) so that's an argument not to allow elderly dependents but to allow settling and bringing up kids.

@Icanttakethisanymore thanks

Pensions were never meant to be passed down as inheritance. They’re meant to be spent by the person saving into them to support them when they’re no longer working.

Pass them to your spouse / civil partner by all means, but I really don’t get the issue that people have about them being subject to IHT.

Most people I know have adult children and they are all having dc so I’m not convinced this is the case.

wouldn’t it be nice if we encouraged them by giving them tax breaks and subsidies for childcare

🤣🤣🤣🤣

Most people I know have adult children and they are all having dc so I’m not convinced this is the case.

Not convinced by what?