The UK state pension is run like a Ponzi scheme. Taxpayers pay National Insurance but this is used to pay the pensions of already-retired people rather than to build up a personal investment pot.
Like all Ponzi schemes, they work well when there are lots more people paying in than taking out, but collapse when the ratio falls. When the UK state pension began in 1909, there were nearly 20 people paying in for every pensioner. Today in 2019, there are only 3 people paying National Insurance for every one pensioner, and that ratio is still decreasing.
Inevitably, the scheme will collapse unless drastic action is taken. Ultimately, the whole system of National Insurance needs reform so that part of the money people pay in is retained and invested in a personal pension plan.
Despite this, today’s report by the Centre for Social Justice - a think-tank intimately linked to the Tories - which encourages Boris Johnson’s government to raise the pension age to 75 by 2035, is an extremely harsh proposal. He still intends to waste billions of pounds per year on some kind of vassalage treaty with the EU (minus the backstop), HS2, Overseas Development and highly expensive and unreliable so-called ‘green energy’, not to mention the hundreds of quangos which syphon off huge amounts of money for no benefit to the British people, while continuing with open-door mass immigration and its associated welfare, healthcare and education costs.
The pension age is already due to rise by two years for men and seven years for women by 2028 so that people will not receive a state pension until they are 67-year-old. Instead of attacking hard-working British people a second time, it would be far better to cut the extreme waste which is a legacy of the Blair/Brown/Cameron/May years, while reforming the state pension scheme so it is supported by an endowment.
Boris needs to learn quickly and implement true fiscal responsibility without harming millions of voters who deserve a decent pension after paying into the system all their lives, or this will be his ‘dementia tax’ moment.