I have read plenty of badly informed articles, with some saying pensioners must keep the triple lock on the state retirement pension as the pension is still low, and from those saying the best test of a government’s serious intent to control the benefit bill is to ask them to remove the triple lock. They mainly assume the state pension is just a universal benefit and see it as a contest between the generous and the mean, between the high spenders and the controlled spenders. In practice is not that easy, as the pension is a contributory benefit or an entitlement earned by making NI contributions over a lifetime. People get different levels of pension based on their contributions, and the NI fund has to balance the tax in with the costs of the contributory benefits paid.
The reformers often have no idea what they are reforming. If for example a government said it would remove the option of a 2.5% increase in a year of low inflation and low wage growth, it would make little difference to the long term costs given the UK tendency to higher inflation. If it removed the wages link there would be savings so pensioners would be worse off, but it would also break the promise of what is a contributory scheme. If someone does not pay in for enough years they get a lower pension. If someone was paying in for a private pension they paid lower NI and get a lower state pension.
The National Insurance Act 1946 and National Assistance Act 1948 as amended by the Social Security Act 1992 and 1999 is the governing law. These lay out that all the National Insurance Contributions are paid into a fund. Under the 1992 Act Ministers have to set contribution rates of NI in relation to “the general level of earnings, the balance on the Fund and payments expected to be made from it in future.” The Government Actuary has to report on the impact of upratings on the fund. This government decided in its first budget to make a large increase in NI presumably taking into account the upratings it awarded.
The last accounts for the Fund to March 2025 show that the fund received £130.9 bn in NI contributions that year with other income of £7.3bn, primarily interest on investments. It paid out £143 bn leaving an annual deficit of £7bn. That left it with a balance for future payments of £79bn. It needs to keep a cash reserve to make payments on a continuous basis. The main contributory benefit paid out was the pension, at £136.9bn. There was a £5bn payment for contributory ESA and £200m for contributory JSA. The Fund also covered the modest costs of the Pensioner Christmas bonus. The next report may show the extra NI paid has created a surplus.
Of course a government with a majority could repeal all the legislation and say that NI is now simply a general tax not giving people any right to a State pension. They could then legislate to make the State pension a normal benefit, with means testing or still available to all regardless of income. It could become a universal benefit which you got whether you had worked and paid NI or not. Means testing it would be robbing people of the pension they have paid in for over any years of paying NI under the Contributory system.
The best way to control the costs of the pension without having to tear up the contributory principle, abolish the Fund and upset many pensioners is to increase the age at which you can draw the pension. Each year of increase in the age saves roughly 7% of the cost. The current pension age is 66. It will rise to 67 by 2028. Legislation says it will rise to 68 by 2046, but governments have announced their wish to bring this forward to 2039. It would make sense to legislate to get to 68 by say 2035 and to 69 by 2045 to increase the savings. People who still want to retire earlier than these later ages should have an option to pay additional NI contributions into the Fund in their later years in employment to buy themselves a full State pension at an earlier retirement age. Alternatively they could retire earlier with a lower State pension where they had private pension or savings so they did not need to claim top up benefits.
April 14, 2026
the whole system is a nonsense.
with people who never contribute ending up getting just as much money in other benefits.
people who are immigrants here late in life getting fully funded retirement having never contributed here.
decent people having their houses confiscated to pay for their care.
no incentive to save, as any declared savings will stop the thousand and one means tested benefits.
I disagree john, people who have paid into the system their entire life should be protected, and their pensions should increase.
people who have not paid into the system should have their pauouts cut.
restore the link between “doing the right thing ” and the money you get, incentivise doing the right thing.
save money by stopping paying for hotels for illegal immigrants, and so many other obvious financial savings measures.
April 14, 2026
Years caring for children under 12 qualify for pension years as do years doing more than 20 hours caring for older people. Plus if you have no assets you usually get the money in benefits instead of pension anyway.
April 14, 2026
THE DAILY T • PODCAST
‘He’s reversing the referendum!’: Another Starmer Brexit betrayal
Jacob Rees-Mogg traduces ‘weak’ PM over Labour plans to realign with EU regulation.
April 14, 2026
Housing slump – Treasury’s stamp duty income risks falling more than £3bn short as sales decline and prices fall.
Reeves’s Doom Loop agenda is speeding up as I expected!
April 14, 2026
Yes, the system is nonesense. I worked abroad for over 20years and paid class 4 NI contributions purely for a state pension. My colleague of similar age and employment status never paid. He received £8 per week more than me in Pension Credits. How does that work
April 14, 2026
Yes, it is a nonsense, starting with the ‘pay as you go’ nature of the system. Other countries ensure that money paid in is invested into a fund…. FOR PENSIONS. We have a tax system, and welfare system, that needs complete overhaul. We all know it but no government will do it. I fear we will only see common-sense when forced to by economic disaster.
April 14, 2026
There does seem to be a penalising of those who have always tried to do the right thing throughout their lives.
We are told we must save for our retirement years, but that seems to be made increasingly difficult with little left over to save after you’ve paid all your basic living costs, including travel to and from work.
April 14, 2026
When increasing the age at which people can claim their State Pension, will there ever be any chance of consideration for those who have spent their working lives in manual work and who, unlike those who have had sedentary careers, will have had far more wear and tear on their bodies (and, perhaps, more wear and tear on their minds through financial stress due to the low wages that manual work often pays)? There are people reaching the current retirement age wondering how on earth they can carry on getting up early in the morning, commuting to work and back on today’s busy and badly-maintained roads, and running their homes, especially if, like many older people, illness and physical difficulties come along. Indeed, some current pensioners are still working to make ends meet. Most do not have additional private pensions because they could not afford to contribute to one and, in the case of WASPI women, we all know how badly they have been treated. Most pensioners are only on the basic State Pension, too, because successive governments seem to take pleasure in making some pensioners better off than others even though the cost of living is the same for everyone. What is the thinking behind that? Where is the fairness?
When we talk about fairness, that goes out of the window when it comes to where government chooses to spend taxpayers’ money. It would rather spend it on supporting illegal migrants who have never contributed and never will, on encouraging people to treat having babies as a lucrative ‘career’ choice, on foreign aid (without tracking what the money is being spent on), on the utter and destructive madness of net zero, and so on. In fact, the list goes on. Our current government is now paying, or considering paying, migrant families up to £40,000 to go back their own countries. This is the same government that is happy to lie to WASPI women saying that compensating them will not be a good use of taxpayers’ money (as if governments are ever worried about wasting taxpayers’ money!), that still has not compensated all the post office subpostmasters and subpostmistresses that were treated so badly some years ago. How can governments continue to find money for their pet vanity projects and dubious causes yet at the same time bleat that there is no money available for their own citizens, the people who pay their handsome wages and generous expenses?
The Coalition government, in 2011, did a good thing and introduced the Triple Lock. It was the first time pensioners received a reasonable boost to their pensions. It would have been a good time to have talked about the future of the new full State Pension which began in 2016 but was only for the few. Millions of people on the basic State Pension receive a lot less that those on the new full one. I know their contributions over the years would have been less but it means that the gap in income between those on the basic and those on the full State Pensions is growing every year, and that is not fair.
The last thing pensioners, and those coming up to pension age, need is a pension that is shrinking even after the Triple Lock because of the ever-rising cost of living, and an ever-increasing retirement age. That is no way to treat those people who have actually contributed to their own pensions, and the pensions and benefits of others, while working. Does anyone in government care?
April 14, 2026
correct my dad did a hard physical job, there is no way he could have worked past 65.
and changing the rules when people have planned for payouts their entire life, when it is too late for them to make alternative plans stinks.
its like the NHS rationing when its too late for you to save for your own treatment, having promised care your entire life, which it does routinely.
we need proper written contracts for what we get for what we pay in, not leaving it to random public sector rationing decisions which you have no way of predicting.
April 14, 2026
You make an excellent point regarding those in manual employment and age.
I’m sure some smart people who don’t live in the real world can just wave their hand and say ‘oh they can change jobs to a more sedentary one’
There has to be enough jobs around for that to be an option that are interchangeable with a life as a manual worker.
B&Q can only take on so many former brickies or other forms of manual employment.
As more people stay working in their later years, or look for work, how does this affect the youth employment market I wonder.
As you rightly point out successive governments have wasted tax payers money and now someone has to pay for their mistakes. Although I think to say mistakes excuses them because it implies they didn’t or don’t understand the consequences of their ideological and vanity projects. They do, a child could work it out with basic maths skills.
It angers me beyond belief that they can get away with this, walk off into the sunset with a payout that we could only imagine in our wildest dreams, and then loftily tell people they need to tighten their belts.
April 14, 2026
Well they have already increased pension ages from 60 to 67 for women and life expectancy recently has gone down not up due to Covid Vaccines, Covid and the rather second rate NHS.
Of course if they ditched net zero, got fracking, drilling, mining and energy costs fell to 25% of current levels as in the US, reduces car taxes and if they stopped increasing council tax so much they would not need so much pension. If they had a growth agenda rather than a doom loop one perhaps that would help too.
In short halve the size of government and stop spending £billions on things of little value, no value or actually negative value like net zero, Covid Vaccines, Covid Lockdowns, the Boris Wave (£20k per household) and other largely low skilled immigration.
April 14, 2026
++Well said.
It seems obvious to many that if the government, past and certainly present, stopped spending money on vanity and ideological pet projects things might improve in the purse.
That’s not going to happen until we have some form of consequences for those who misuse the public purse.
A lot of the waste is not down to genuine mistakes, but genuine profligacy.
April 14, 2026
Plus corruption (often political) in many cases in awarding contracts and selecting people for jobs in the state sector or Quangos.
April 14, 2026
Pensioners have paid NI contributions into the system all their working lives. Each year the state spends the money contributed on general expenditure. The state pension and it’s earnings related element known as SERPS have been used by many of those approaching pensionable age to calculate how much savings they need to put away whilst they are still working.
Why should the pensioners have their income reduced because successive governments need to pay for excessive inward migration and particularly, the boat people? Already, this government has tried to tinker with the pensioner’s winter fuel allowance.
The pensioners are not responsible for the profligacy of previous governments. If money has to be saved, the way to do it is to reduce the benefits bill for those who claim they cannot work, asylum seekers and their families and particularly the boat people.
Reply Try reading my piece before writing your misleading or wrong pieces. We pay our NI into a fund and its pays the pensions out of those receipts, not general spending. It is a pension fund where current contributors pay for current pensioners.
April 14, 2026
My Lord,
Are you saying the state pension scheme as it is today, is actually a ponzi scheme which would be illegal if a private company ran it?
Reply The NI financed scheme is legal under its own Acts of Parliament and entails today’s contributions paying for today’s pensions. You would not let a private company do that because it could go bust, whereas there will always be a state which can always collect NI
April 14, 2026
Well a state can also go (like Birmingham or Denis Healey) but but they can also just change the law to give state pensions only to those over 90 or tax the pensions at 90% or grab say 90% in IHT rather than 40%, or cheat the Waspi Women.
Playing chess but the state can always change the rules as the game progresses.
April 14, 2026
But we all know there is no fund as such, National Insurance is collected as general taxation that is why the government uses ur as a cash cow, particularly employers NI.
No mention is made of reducing the gold plated public sector pensions which are either partially or completely unfounded or increasing the age when they can be drawn.
The police is a particularly goid example, being able to retire at 50 on full pensions then walk back into the similar job as a civilian.
There are plenty of avenues to reduce spending without touching the miserable state pensions.
April 14, 2026
They mainly assume the state pension is just a universal benefit.
And there lays the problem with liebour they see the pension a benefit and not something that most working people are entitled to unless you’ve never done a days work in there lives like some of the scrounging parasite on freebie benefits the liebour government chuck money at you, which really pisses me off I worked in transport as a HGV mechanic for over 40 years and only bought what I could afford including a new house new cars and holidays abroad because these were my entitlement of all the hard work I put into the system and not hand outs from anyone, so when I retired I am entitled to a pension to let me live some form of life and not have to watch every penny I spend unless you’ve been on benefits all of your miserable lives at the working person’s expense in the form of taxes by me then YES as a pensioner we should get a good living amount of money End of rant
April 14, 2026
It does seem as if the Labour government, and their followers, seem to regard the State Pension as just another benefit and NI as just another tax. This must be resisted by all pensioners as we have paid into the fund and expect to be paid from it.
While clearly the amount we are paid should increase by the rate of inflation to compensate for the profligacy of governments printing money and it seems reasonable to increase it based on increases in wages which lead to more being paid into the NI fund, I find it hard to defend increasing it by 2.5% even if there’s no inflation or wage increase.
April 14, 2026
Jeremy Hunt when Chancellor was keen to reduce and eventually eliminate NI under the guise of “simplification” but I always thought it was because he wanted to break the link between NI and pension contributions and turn the pension into a means-tested benefit.
If I buy an annuity for £100,000 from an insurance company they have to pay me £6000 a year. What they do with the £100,000 is of no interest or relevance to me, they might prudently invest it to fund the £6000 payments or they may spend it all immediately on a bonus for the CEO – I don’t care. Same with NI – I paid in for 30 years so the government pays me a pension, that was the deal, what they actually did with my NI contributions is not my concern.
April 14, 2026
Working to age 68 (or older) is probably fine IF you have a desk job, particularly if it is a high status one. Lounging around on the red benches of Parliament with a daily stipend and accessing taxpayer-subsidised restaurants and bars, seems to be the ultimate in comfortable “working” conditions to me. It is a completely different matter if you work in other sectors, particularly construction which takes a heavy physical toll on the body.
If the country needs to make significant public expenditure savings (and it does) then it should start by scrapping ALL welfare paid to immigrants (including the criminal ones exploiting the ridiculous asylum system) and access to “free” public services should be barred unless and until they become British citizens. The only exception should be emergency health treatment for genuine health emergencies. If they arrive with an existing health condition it is NOT an emergency.
As it is, successive Governments have turned the UK into the Welfare State for the World, his wife, parents and umpteen “dependants.”
The second place to seek savings should be the civil service/public sector pension schemes. Final salary schemes should be scrapped and they should be placed on a level playing field with the private sector where final salary schemes have disappeared.
April 14, 2026
+1.
A special state sector pension tax at say 100% over £15k PA would be fair and very hard to evade! The state pensions are after all funded by the far less well pensioned private sector.
April 14, 2026
That seems a very good explanation Lord John but I am sure that I’ve read many times that there was no “fund” as such – that NI was simply a further tax added to the income tax pot. The “State Pension” was therefore paid out of the ‘petty cash’ till so to speak – from this years tax take? Which leads me to ask about Civil Service Final Salary, Index Linked pensions. There is no fund there either I thought or am I mistaken with this too?
Reply This explains the NI fund.Civil service and NHS pensions are not funded. Local government and MP pensions are paid out of endowment funds as those contributions were saved and invested like a private pension.
April 14, 2026
First – government should publish the figures about the cost of public sector pensions. This to include payments in excess of “fully funded” pensions and the annual employer contribution which facilitates the “fully funding” of some of those pots. Civil servants should not be getting up to 28% of salary contributed into their pension pots. Change all civil service pensions to defined contribution now. Contributions already paid in can be kept.
Then take the inflation element of the triple lock out. 2.5% – Ok. Average wage rises – OK. Inflation, pensioners (and benefits recipients) should not be protected from inflation anymore than the workers. They should feel the same benefits and pain as the rest of the workforce.
Pension credits are paid to those who have not contributed sufficiently so perhaps that should be part of the conversation. We have people on benefits of pensionable age being paid more than pensioners and still having their housing paid for.
Perhaps we are looking for savings in the wrong area when discussing the state pension which is a contributary payment rather than a benefit.
April 14, 2026
While the economy is in so much debt and generally dying on it’s feet it strikes me that there is little scope to change anything with pension currently – we’ll have to wait for a sensible right of centre party to get in to make some rational changes to grow the economy.
Surely it is time that that we stopped using NI to fund pensions – it no longer makes sense. A good many companies provide all sorts of insurance options to their employees, so why not include the freedom to save as much as you can in a personal pension?
That money would be ring-fenced by the insurance company, adding in a small incentive of interest at a low but sustainable rate.
This would all give pensioners more options on how they used their pension pot.
On a cut-off date, any NI paid would be switched to an insurance company chosen by the employees, and that would save HMG having to worry about pensions ever again.
Those that live a good part of their lives on benefit would be allowed a national pension, now classed as benefits. Those already retired could continue to take the OAP, but should have the option of investing any funds they still have in NI into a scheme of their choosing.
Even small companies could work with insurance companies to establish insured pensions, which might become a tad more complicated where people move around jobs frequently.
The less we give to big government to manage on our behalf the better, as we have seen from many aspects of life, HMG is barely competent.
April 14, 2026
“Barely Competent” you are being rather generous. £trillions wasted on diff Covid Vaccines, Lockdowns, Net Zero, Millitary procurement, Blair’s idiotic wars, HS2, bat tunnels, fish discos… the list is endless.
April 14, 2026
Yes retirement age should depend on type of work people have been doing for instance construction workers, fishermen and plumbers should be allowed retire earlier – also people who have to crawl into small spaces to do their work – and what about women doing sewing and needlework with diminished eyesight and then those who need to maintain finger dexterity to keep up – the whole thing is a mine field.
April 14, 2026
Let’s look at the day to day reality for many indigenous working age folk.
A low earning family working manually is paying far too much in council tax, income tax, NI and vat to also pay additional NI so that they can retire “early”. I’m 69 and probably couldn’t work manually for 30 odd hours a week. I’m guessing you the same.
On the other side of the ledger, this family’s tax is going to pay for all manner of fripperies of far less importance than their future pension. So surely the first port of call shouldn’t be to increase the age at which these poor people qualify to take the pension to which they’ve contributed? The first port of call should be to deny benefits to the millions who haven’t contributed.
April 14, 2026
We should stop the ludicrous practice of giving free National Insurance credits to those receiving benefits, and also remove the right for people to buy back added years. Tens of thousands of people living abroad receive UK Child Benefit, and this gives them free NI credits, which then entitles them to the UK State Pension when they have never contributed a penny towards it. You also now get foreign nationals who have worked for a few years in the UK buying added years. This entitles them to a pension in more than one country, providing them with an income far higher than that of UK residents, who are capped at 35 years. Yet again, we see a two-tier system whereby foreigners are treated better than those working in the UK, and it is costing the taxpayer huge amounts.
April 14, 2026
The issue is not how generous or not the state pension is. The bigger issue is why people who have never made any contribution towards their own wellbeing either through work effort or otherwise imagine they have a right to demand welfare by taking money from those who have worked and contributed to the national purse.
The unfairness becomes even more ridiculous when people simply arrive in the UK from afar and immediately receive state support greater than those people who were born and worked in the UK their entire lives.
Under those unfair situations the native wealth creators simply stop creating wealth. They ask what is the point, if their wealth is simply taken from them to pay those who have contributed nothing and never will?
April 14, 2026
All pension schemes including the state’s offer a deal made in hell: in return for a tax break on contributions and (possibly) a modest uplift on the return you get, you relinquish ownership of the capital you have saved over a lifetime. It leaves your estate when you die, never to return.
No wonder the pension industry booms. No wonder the state wants a slice. And as if that were not enough, inflation means you save in good money and get paid in bad.
Had you not been seduced by this devil’s bargain and just saved, your heirs would retain that capital for ever, generation after generation, providing family income or growing exponentially by the miracle of compound interest. At worst they would take an IHT hit, but a little forward planning would fix that.
April 14, 2026
Meanwhile, Two-Tier is advancing plans to make us an Associate Member of the EU … which I have been predicting was the Establishment’s intention for some time.
A couple of days ago Zelensky set out the plan nicely:
Zelensky: ““If the United States truly thinks about withdrawing from Nato, then European security will be based solely on the EU. But not in its current form,” Mr Zelensky told The Rest is Politics podcast. He added: “I think that the EU is in a situation where it needs more countries. The UK, Ukraine, Turkey and Norway; these are four strong countries which are part of Europe.”
These are precisely the countries which I have been saying would become Associate Members, along with others outside the Eurozone.
And now the new Hungarian President, in his first official statement, has said the UK should rejoin.
The Establishment, and the puppet Two-Tier, are rolling the pitch for The Great Betrayal.
April 14, 2026
Seems so!
April 14, 2026
On the other hand, if you have voted for borrow and waste governments all your adult life, you don’t deserve a state pension. How do you think the National Debt will be paid down if people don’t take responsibility for their voting patterns?
Divvy up the increases in debt of successive governments amongst those who voted for them and deduct it from their state pension allowance. Would there be any left?
April 14, 2026
Thank you for that very helpful explanation. It would be still more helpful if the politicians dealing with matters such as this gave cogent reasons for their decisions and actions rather than the point scoring that is the norm. Reform seem no better than anyone else in this: following their recent decision to keep the Triple Lock, all we heard from Mr Tice was that it was the result of full discussion, but no hint of the reasons which may well have been just the ones that you have set out.