Bankrupt State Pension

The latest report by the Government Actuary's Department (GAD) paints a pretty grim picture for the future of the State Pension. It projects the National Insurance fund used to pay out the State Pension will be exhausted within 15 years. The result? The harsh reality is that, as the aging population bites the cost of the state pension will inevitably boom.

 

There will have to be a reduction in public services to cover the cost or taxpayers will have to pick up the slack to the tune of hundreds of billions of pounds. There really are no winners on this.

 

Should we be surprised though?

 

The issue has been known for the past few decades (or more) but no political party in power wants to address the issue. The State Pension, Income Tax and National Insurance are all political decisions. Politicians aren’t exactly famed for their long term thinking and planning given longevity in their position is all too rare. Let me put this into perspective, Esther McVey become the fifth Secretary of State For Work & Pensions since 2012. How can we expect long term joined up thinking with such a high turnover in the key position? (such a key position that only 1 in 1000 people new who she was in a recent survey!!!)

 

Then add to the fact that any Government that does take positive action to address the State Pension blackhole will receive a huge negative snowball from those people or areas that will have to pay for it……hardly any encouragement to show courage and leadership is it. Hardly a vote or popularity winner.

 

We have a very ‘safe’ Government currently that will simply kick the can down the road for someone else to pick up……and there is a readymade excuse of Brexit negotiations that the Government can use to duck taking ownership. Convenient. Very convenient.

 

But make no mistake, at some point extremely tough decisions will need to be taken as demographic reality hits the UK finances.