My statement on the pension system
In my recent podcast episode (Fremzenek Podcast Episode 4), I covered the recent UK 2025 Autumn budget. I, self admittedly, was rather harsh on pensioners; by no means am I ‘anti-pension’, if anything I am the opposite, I think the state-pension is one of the many great luxuries afforded to us by the modern economy, and to not have one would be a great disservice to the highly productive, fairly prosperous times we live in. In the interest of clarity, the following is a rough outline of my issues with the pension system and why it, for the most part, is deeply flawed. I will try to keep this brief as I am mainly doing this to expand upon the statements made in the episode mentioned.
The foremost issue, in my mind, is that the state pension is paid out based on how many years you contributed to the national insurance ‘pot’; this makes sense to an extent, however, the function of national insurance should be to save up this ‘pot’; countries like Singapore enforce a certain % of income to be put into savings, and these savings are then invested by the state to generate a return. In the UK, these national insurance contributions are, essentially, just an extension of the income tax, and do not contribute to any tangible investment. Picture a ‘Sovereign pension fund’ that, much like Singapore, takes national insurance contributions, and invests it into domestic, or international projects, that can yield a return on investment to then further the value of this ‘pot’; state pension payouts would withdraw from this pot and, therefore, national insurance contributions would represent a genuine, tangible investment, rather than yet another tax to fund the annual expenditure of the government.
Going into the details of ‘divvying out’ this pot, also brings me to my other criticism of the current pension system; it is not means tested at all, it is, as I explained earlier, solely based on the number of years worked, which represents the number of years paid into national insurance. This is, however, not means tested and every attempt in the past (such as the winter fuel payment reforms) has been heavily opposed by pensioners, despite the fact that this system is wholly unsustainable as our population continues to age, means testing it would atleast aid somewhat, with the fact that pensioners are guaranteed a state pension, even if their private pension may pay out extremely generously, furthering the burden on the tax payer; without a ‘pension wealth fund’ as described before, the pension is consistently funded purely through tax revenue, and as our proportion of worker to pensioner becomes less and less, and inevitably we have more pensioners than workers, huge productivity rises to fund this will become necessary, something we simply are not seeing.
My heavy handedness during the podcast episode, therefore, stems not from spite or a ‘disliking’ of pensioners, but from a frustration with the pension system, and the refusal to allow any pension reform, the triple lock COULD be sustainable with the system I have priorly explained, with Singapore (as my main example) raising pension payments by roughly 2% a year, ever so slightly lower than our triple-lock system.