>#How Europe waged war on young people to pay for pensions
>__Countries are taking drastic action to rein in spiralling state pension bills – could Britain follow suit?__
>When King George VI signed the National Insurance Act, the state pension became the foundation of British retirement.
>Since 1948, its universal payouts have rescued millions of people from a retirement of abject hardship – and undoubtedly some from an early grave.
>Before the ink had dried, however, an eye-watering bill was looming. Its architects confidently forecast an outlay of just £501m by 1978, but none foresaw future generations quitting the coal mine, having fewer children and living well into their 80s or 90s.
>When 1978 arrived, the true cost had spiralled to £7.6bn – around 15 times above budget. By the end of the current decade, fuelled by the triple lock, it will hit £181.2bn, an increase of over 25pc in just five years.
>The problem has also become entrenched across Europe and governments are inadvertently pitting old against young in a desperate battle to balance the books.
>Older generations, who feel they’ve earned their payouts, can watch on contentedly – safe in the knowledge that their pensions will keep rising – as their governments ratchet up retirement ages for younger generations and the contributions they must pay in.
>But across the divide, many young people – now expected to work for longer to foot the existing pensions bill and losing faith that the state will be able to afford such payouts by the time they retire – are taking to the streets.
>A bubbling resentment threatens to spill over.
The increasingly urgent question is how Britain, facing its own huge bill for pensioners, will solve this problem. Can it take inspiration from its European neighbours?
>__Sleepwalking into retirement__
>After an unprecedented post-war baby boom, decades of falling birth rates and rising life expectancy, a fifth of citizens in the UK and Europe are already over 65.
>By 2050, this will hit one in four in the UK and almost one in three across Europe.
>Two thirds of EU residents also have no pension savings, leaving up to 170 million people sleepwalking towards a retirement on state-sponsored benefits.
>European countries have attempted their own solutions with varying degrees of success.
>For some, the simplest and fairest way to cut state pension spending was to increase the age at which people can claim it. With life expectancy increasing into the 80s, these nations argued that people didn’t need to retire at 60.
>In Scandinavia, the state pension age is now linked to life expectancy. In Finland, it is rising to 65 and Denmark has already passed a law to raise it to 70 by 2040, while in Sweden it will soon hit 67 for those wanting to claim a payment without any reductions.
>All three have a formula for increasing pensions each year, based on wages and inflation, and Sweden refuses to pass on any increases in times of economic decline.
>Crucially, none of the three governments had their hand forced by the triple lock and opposition was muted at best. Protests were small-scale and calm, bordering on polite, while the threat of strikes never truly materialised.
>It’s a path that successive governments in Britain have also walked, beginning with equalising women’s state pension age with men’s from 2018. The now-universal age then increased gradually to 66 in 2020 and will take another two years to hit 67 in 2028. Even the rise to 68 is not expected to be complete until 2046.
>But this has done little to rein in costs so far. In 2018-19, state pension spending was £96.7bn, but it will hit £154bn next year – an increase of almost 60pc since equalisation.
>The key driver is the triple lock, which continues to hamstring any politician who might want to eradicate it and still have a chance of re-election.
>Introduced from 2011 and widely believed to be the only such measure in Europe, it guarantees that payments will increase by the highest of wages, inflation or 2.5pc and no government has looked to scrap it since.
>By 2030, the measure will cost £15.5bn a year, according to the Office for Budget Responsibility.
France hits a roadblock
>Far from raising their state pension age, the French hold the distinction of being one of the only European countries to have reduced it. In 1982, as part of a radical left-wing agenda, President François Mitterrand decided that it should fall from 65 to 60.
>France now has one of Europe’s lowest retirement ages at just 62, and hands almost 15pc of its GDP to pensioners.
>Faced with an unsustainable bill, politicians decided something finally had to give. In 2023, President Emmanuel Macron passed reforms to increase the age to 64, using a constitutional clause to avoid a vote in parliament.
>Trade unions responded with 14 days of protests, attracting well over a million people nationwide, and at one protest in Paris, the Place de la Concorde was set alight as over 120 people were arrested in clashes with riot police.
>Macron’s government narrowly survived a no-confidence vote from furious parliamentarians. Late last year, Prime Minister Sébastien Lecornu eventually postponed the changes until after the 2027 presidential election – a move expected to cost more than €2bn.
Minimum_Rice555 on
This will definitely be one of the key questions to figure out going forward. As now 80+ average age is normal, e.g. in Madrid 85 is the average life expectancy, the books are really difficult to balance if you contribute 30 years of your 85. I think in the next generation we will see a drastic increase of pension age, probably even into the 70s in some cases.
Minimum_Rice555 on
This will definitely be one of the key questions to figure out going forward. As now 80+ average age is normal, e.g. in Madrid 85 is the average life expectancy, the books are really difficult to balance if you contribute 30 years of your 85. I think in the next generation we will see a drastic increase of pension age, probably even into the 70s in some cases.
umpfke on
Already know I’ll be working till 75 even after retirement at 67 or so (flexi-jobs). Just to pay energy bills and gen X pensions (I’m early millenial).
The stupid thing is that these flexi-jobs actually take jobs from younger people and give employers loopholes to not pay good wages to people actually looking for jobs at 30 or 40 or 50.
It’s a big pile of ****.
Careless-Pin-2852 on
Is waging
QVPHL on
This is why Spain is welcoming immigrants and increasing immigration. They will help pay for these pensions through their taxes.
spingegod on
I feel like most people focus too hard on demographics and on “no way few younger people can support a welfare state filled with elders” premises. The cold hard truth is that western society already produces more than enough wealth for all of us not to have to slave away our entire lives. This is also something that’s getting progressively more obvious as automation becomes increasingly more prevalent. The grand issue is the way resources are allocated and distributed. Compounding interest and rampant market capitalism is creating a class of ultra wealthy whose families will never have to work a day in their lives and the erasure of a middle class (whatever that is) that is owning less and less assets
Salt-Cat4487 on
The real issue is that most European pension systems were designed for a completely different demographic reality. Longer life expectancy + low birth rates were predictable, but reforms were always postponed because they’re politically unpopular.
RevolutionaryGain823 on
I think a lot of European redditors don’t really understand how our tax system and economy work and just parrot what they hear from Muricans. I’ve seen a bunch of comments where people just say “just keep raising taxes and everything will be fine”.
France (for example) already has among the highest taxes and social welfare (heavily influenced by pensions) spending in the world. And any effort to cut that spending results in massive riots. The problem is that for the last 20+ years the French (and generally European) economies have stagnated badly while the US and China have raced past. Europe is flogging a dead horse. Trying to keep raising taxes and adding more regulations to already stagnant and decaying companies. Eventually all our companies will die and we’ll have no one left to tax.
And many young people are still convinced that fighting for lower retirement age is a good thing for them. It’s insane how sensitive of a topic it is, even though the bills will hit our generation in the face when time has come.
GoldustRapedMyDad on
Lmfao forget it. If you honestly believe there will be any pensions left for you when you think its going to be your turn then you are going to be in a serious crude awakening when you realize you haven’t saved anything once it gets rug pulled – and it will because it’s unsustainable.
One of the many funny things about this pyramid scheme i’ve ever seen is the fact we genuinely convinced people bringing in millions of fiscally negative net dependents would help alleviate this burden lmaoooooo
hype_irion on
And yet our societies have allowed for parasitic and non-contributing multi-billionaires (soon trillionaires) to exist.
Ferreman on
The way pensions will be allocated will change. I think there will be more need for people building up their own pensions to a certain degree in the future. The way it’s done now, is no longer feasible. I honestly don’t think my generation and I will have a pension like they exist now. I’m investing part of my money to make sure I will be able to retire on my own terms in the future.
50_61S-----165_97E on
Young people are effectively financial slaves to the pensioners. The old consistently vote for policies that maintain their generous pension/benefits, it doesn’t matter if the economy is doing poorly, their benefits never take a hit because they force working people to pick up the bill.
With birth rates crashing, young people will never be able to vote in large enough numbers to fight against this parasitic relationship.
Vargrr on
It’s because the companies making billions out of their workers should be bearing a lot more of the bill.
You know they are slacking when some company monthly pay cheques are smaller than some currently paid out pensions.
It’s not the earlier generation’s fault – it’s just another symptom of wealth inequality within our society.
If companies and the ultra-rich paid their fair share, this would not be an issue.
We really need to be asking if it is ethical for any company to be making billions every year?
Nono6768 on
You’ll never read that kind of stuff again after Axel Springer buys the Telegraph
Nanowith on
Funny for the Telegraph to be saying this when that’s consistently the platform they advocate for here inside the UK. Where’s this criticism when it comes to local UK policies?
morbihann on
Must have been nice for those who retired at 55 and got to enjoy retirement.
atchijov on
Right now money flow in one direction – up. We need tax structures which makes billionaires impossible. After first 100 millions, further wealth acquisition doesn’t make sense.
MightyHydrar on
Part of the problem is that pensioners and soon-to-be-pensioners are usually by far the most reliable voting group, with high party loyalty.
Young people have much lower turnout and tend to vote based on “vibes” and what- or whoever is trending on tiktok the week before election day, so even if a party in power tries to help young people, chances are high they will get absolutely no gratitude for it. So why bother?
So there’s every motivation for parties in power to support pensioners at the cost of the young.
soulstriderx on
This article pits young and old but that’s the wrong divide. It should focus on working and ruling classes. How come there’s an explosion of wealth for the 1% but austerity measures are needed for the 99%?
AffectionateGrass840 on
There was an article a while back which suggested that let’s raise the pension age to 75 since people in their 30’s and 40’s don’t expect to retire before that anyways. It’s like let’s make their fear come true. Truth be told, as 41 year old I don’t expect to retire and receive state pension anyway. The retirement age has probably “run off” by then judging by the way things are progressing and the state pension changed or out of money or whatever. I mean 30+ years is a loooong time given that every 4-5 years new parties come to power and whatnot. There’s no assurance.
MercatorLondon on
the world’s first state pension system was introduced in Germany by Bismarck in 1880ies.
It was contributory scheme launched to provide social security – initially covering disability (invalids) and old age for workers aged 70+. That age was way above the life expectancy of that time. Average age was only 42 (given the high child mortality that distorted the statistics) But in 1880ies people generally reached life expectancy was around 60-70. So that pension scheme was more safety net for those few who lived up to 70.
Now we have a generations of pensioners that spend 20-25 years in retirement.
B3owul7 on
waged? Past? Bro, the war is still going on.
mgm50 on
As someone younger than 40 I’m fully prepared to retire on death, this is a worldwide thing but yes, turbocharged in EU. A lot of social policies *could* come into place but probably not from the current generation? The 60+ crowd will hold on to dear life, quite literally, to the existing pension plans and their precious home/asset valuation, before even thinking that another way of organizing society is possible at all.
insomnimax_99 on
I’m in my mid 20s – I’m just assuming that the state pension won’t exist by the time I hit retirement age and planning accordingly. It’s so utterly unsustainable that it’s doomed to collapse in some form.
If it’s still around then it will be a nice bonus, but I’m not counting on it. Luckily, my employer has an extremely generous defined benefit pension scheme with a retirement age of 62, and I’m putting money in a separate pension pot on top of that.
Unfortunately, lots of retirees and soon to be retirees don’t have their own private pension pots and therefore are/will be dependent on the taxpayer. The UK only introduced auto-enrolment in 2012 so there will be a lot of people before then who never saved anything, expecting the taxpayer to support them. But the taxpayer is becoming overburdened, which is only getting worse as birth rates decrease and dependency ratios increase.
FrenchCrazy on
This is the reality too in America as social security balloons. I’m running off the assumption that I’ll get nothing from the system I contributed and am aggressively saving for my own retirement.
Efficient_Wall_9152 on
If you want a pension, have the kids to replace the next generation and encourage those kids to do the same
Tabo1987 on
My biggest concern is that despite me saving and investing as much as I can the state will just tax that heavily as well and ask for social security contributions on top.
LaurestineHUN on
Have we tried to stop redistributing all the money from the bottom up?
30 commenti
>#How Europe waged war on young people to pay for pensions
>__Countries are taking drastic action to rein in spiralling state pension bills – could Britain follow suit?__
>When King George VI signed the National Insurance Act, the state pension became the foundation of British retirement.
>Since 1948, its universal payouts have rescued millions of people from a retirement of abject hardship – and undoubtedly some from an early grave.
>Before the ink had dried, however, an eye-watering bill was looming. Its architects confidently forecast an outlay of just £501m by 1978, but none foresaw future generations quitting the coal mine, having fewer children and living well into their 80s or 90s.
>When 1978 arrived, the true cost had spiralled to £7.6bn – around 15 times above budget. By the end of the current decade, fuelled by the triple lock, it will hit £181.2bn, an increase of over 25pc in just five years.
>The problem has also become entrenched across Europe and governments are inadvertently pitting old against young in a desperate battle to balance the books.
>Older generations, who feel they’ve earned their payouts, can watch on contentedly – safe in the knowledge that their pensions will keep rising – as their governments ratchet up retirement ages for younger generations and the contributions they must pay in.
>But across the divide, many young people – now expected to work for longer to foot the existing pensions bill and losing faith that the state will be able to afford such payouts by the time they retire – are taking to the streets.
>A bubbling resentment threatens to spill over.
The increasingly urgent question is how Britain, facing its own huge bill for pensioners, will solve this problem. Can it take inspiration from its European neighbours?
>__Sleepwalking into retirement__
>After an unprecedented post-war baby boom, decades of falling birth rates and rising life expectancy, a fifth of citizens in the UK and Europe are already over 65.
>By 2050, this will hit one in four in the UK and almost one in three across Europe.
>Two thirds of EU residents also have no pension savings, leaving up to 170 million people sleepwalking towards a retirement on state-sponsored benefits.
>European countries have attempted their own solutions with varying degrees of success.
>For some, the simplest and fairest way to cut state pension spending was to increase the age at which people can claim it. With life expectancy increasing into the 80s, these nations argued that people didn’t need to retire at 60.
>In Scandinavia, the state pension age is now linked to life expectancy. In Finland, it is rising to 65 and Denmark has already passed a law to raise it to 70 by 2040, while in Sweden it will soon hit 67 for those wanting to claim a payment without any reductions.
>All three have a formula for increasing pensions each year, based on wages and inflation, and Sweden refuses to pass on any increases in times of economic decline.
>Crucially, none of the three governments had their hand forced by the triple lock and opposition was muted at best. Protests were small-scale and calm, bordering on polite, while the threat of strikes never truly materialised.
>It’s a path that successive governments in Britain have also walked, beginning with equalising women’s state pension age with men’s from 2018. The now-universal age then increased gradually to 66 in 2020 and will take another two years to hit 67 in 2028. Even the rise to 68 is not expected to be complete until 2046.
>But this has done little to rein in costs so far. In 2018-19, state pension spending was £96.7bn, but it will hit £154bn next year – an increase of almost 60pc since equalisation.
>The key driver is the triple lock, which continues to hamstring any politician who might want to eradicate it and still have a chance of re-election.
>Introduced from 2011 and widely believed to be the only such measure in Europe, it guarantees that payments will increase by the highest of wages, inflation or 2.5pc and no government has looked to scrap it since.
>By 2030, the measure will cost £15.5bn a year, according to the Office for Budget Responsibility.
France hits a roadblock
>Far from raising their state pension age, the French hold the distinction of being one of the only European countries to have reduced it. In 1982, as part of a radical left-wing agenda, President François Mitterrand decided that it should fall from 65 to 60.
>France now has one of Europe’s lowest retirement ages at just 62, and hands almost 15pc of its GDP to pensioners.
>Faced with an unsustainable bill, politicians decided something finally had to give. In 2023, President Emmanuel Macron passed reforms to increase the age to 64, using a constitutional clause to avoid a vote in parliament.
>Trade unions responded with 14 days of protests, attracting well over a million people nationwide, and at one protest in Paris, the Place de la Concorde was set alight as over 120 people were arrested in clashes with riot police.
>Macron’s government narrowly survived a no-confidence vote from furious parliamentarians. Late last year, Prime Minister Sébastien Lecornu eventually postponed the changes until after the 2027 presidential election – a move expected to cost more than €2bn.
This will definitely be one of the key questions to figure out going forward. As now 80+ average age is normal, e.g. in Madrid 85 is the average life expectancy, the books are really difficult to balance if you contribute 30 years of your 85. I think in the next generation we will see a drastic increase of pension age, probably even into the 70s in some cases.
This will definitely be one of the key questions to figure out going forward. As now 80+ average age is normal, e.g. in Madrid 85 is the average life expectancy, the books are really difficult to balance if you contribute 30 years of your 85. I think in the next generation we will see a drastic increase of pension age, probably even into the 70s in some cases.
Already know I’ll be working till 75 even after retirement at 67 or so (flexi-jobs). Just to pay energy bills and gen X pensions (I’m early millenial).
The stupid thing is that these flexi-jobs actually take jobs from younger people and give employers loopholes to not pay good wages to people actually looking for jobs at 30 or 40 or 50.
It’s a big pile of ****.
Is waging
This is why Spain is welcoming immigrants and increasing immigration. They will help pay for these pensions through their taxes.
I feel like most people focus too hard on demographics and on “no way few younger people can support a welfare state filled with elders” premises. The cold hard truth is that western society already produces more than enough wealth for all of us not to have to slave away our entire lives. This is also something that’s getting progressively more obvious as automation becomes increasingly more prevalent. The grand issue is the way resources are allocated and distributed. Compounding interest and rampant market capitalism is creating a class of ultra wealthy whose families will never have to work a day in their lives and the erasure of a middle class (whatever that is) that is owning less and less assets
The real issue is that most European pension systems were designed for a completely different demographic reality. Longer life expectancy + low birth rates were predictable, but reforms were always postponed because they’re politically unpopular.
I think a lot of European redditors don’t really understand how our tax system and economy work and just parrot what they hear from Muricans. I’ve seen a bunch of comments where people just say “just keep raising taxes and everything will be fine”.
France (for example) already has among the highest taxes and social welfare (heavily influenced by pensions) spending in the world. And any effort to cut that spending results in massive riots. The problem is that for the last 20+ years the French (and generally European) economies have stagnated badly while the US and China have raced past. Europe is flogging a dead horse. Trying to keep raising taxes and adding more regulations to already stagnant and decaying companies. Eventually all our companies will die and we’ll have no one left to tax.
Sources:
https://www.statista.com/chart/24050/social-spending-by-country/
https://www.reddit.com/r/EconomyCharts/s/n6dtovc4E3
And many young people are still convinced that fighting for lower retirement age is a good thing for them. It’s insane how sensitive of a topic it is, even though the bills will hit our generation in the face when time has come.
Lmfao forget it. If you honestly believe there will be any pensions left for you when you think its going to be your turn then you are going to be in a serious crude awakening when you realize you haven’t saved anything once it gets rug pulled – and it will because it’s unsustainable.
One of the many funny things about this pyramid scheme i’ve ever seen is the fact we genuinely convinced people bringing in millions of fiscally negative net dependents would help alleviate this burden lmaoooooo
And yet our societies have allowed for parasitic and non-contributing multi-billionaires (soon trillionaires) to exist.
The way pensions will be allocated will change. I think there will be more need for people building up their own pensions to a certain degree in the future. The way it’s done now, is no longer feasible. I honestly don’t think my generation and I will have a pension like they exist now. I’m investing part of my money to make sure I will be able to retire on my own terms in the future.
Young people are effectively financial slaves to the pensioners. The old consistently vote for policies that maintain their generous pension/benefits, it doesn’t matter if the economy is doing poorly, their benefits never take a hit because they force working people to pick up the bill.
With birth rates crashing, young people will never be able to vote in large enough numbers to fight against this parasitic relationship.
It’s because the companies making billions out of their workers should be bearing a lot more of the bill.
You know they are slacking when some company monthly pay cheques are smaller than some currently paid out pensions.
It’s not the earlier generation’s fault – it’s just another symptom of wealth inequality within our society.
If companies and the ultra-rich paid their fair share, this would not be an issue.
We really need to be asking if it is ethical for any company to be making billions every year?
You’ll never read that kind of stuff again after Axel Springer buys the Telegraph
Funny for the Telegraph to be saying this when that’s consistently the platform they advocate for here inside the UK. Where’s this criticism when it comes to local UK policies?
Must have been nice for those who retired at 55 and got to enjoy retirement.
Right now money flow in one direction – up. We need tax structures which makes billionaires impossible. After first 100 millions, further wealth acquisition doesn’t make sense.
Part of the problem is that pensioners and soon-to-be-pensioners are usually by far the most reliable voting group, with high party loyalty.
Young people have much lower turnout and tend to vote based on “vibes” and what- or whoever is trending on tiktok the week before election day, so even if a party in power tries to help young people, chances are high they will get absolutely no gratitude for it. So why bother?
So there’s every motivation for parties in power to support pensioners at the cost of the young.
This article pits young and old but that’s the wrong divide. It should focus on working and ruling classes. How come there’s an explosion of wealth for the 1% but austerity measures are needed for the 99%?
There was an article a while back which suggested that let’s raise the pension age to 75 since people in their 30’s and 40’s don’t expect to retire before that anyways. It’s like let’s make their fear come true. Truth be told, as 41 year old I don’t expect to retire and receive state pension anyway. The retirement age has probably “run off” by then judging by the way things are progressing and the state pension changed or out of money or whatever. I mean 30+ years is a loooong time given that every 4-5 years new parties come to power and whatnot. There’s no assurance.
the world’s first state pension system was introduced in Germany by Bismarck in 1880ies.
It was contributory scheme launched to provide social security – initially covering disability (invalids) and old age for workers aged 70+. That age was way above the life expectancy of that time. Average age was only 42 (given the high child mortality that distorted the statistics) But in 1880ies people generally reached life expectancy was around 60-70. So that pension scheme was more safety net for those few who lived up to 70.
Now we have a generations of pensioners that spend 20-25 years in retirement.
waged? Past? Bro, the war is still going on.
As someone younger than 40 I’m fully prepared to retire on death, this is a worldwide thing but yes, turbocharged in EU. A lot of social policies *could* come into place but probably not from the current generation? The 60+ crowd will hold on to dear life, quite literally, to the existing pension plans and their precious home/asset valuation, before even thinking that another way of organizing society is possible at all.
I’m in my mid 20s – I’m just assuming that the state pension won’t exist by the time I hit retirement age and planning accordingly. It’s so utterly unsustainable that it’s doomed to collapse in some form.
If it’s still around then it will be a nice bonus, but I’m not counting on it. Luckily, my employer has an extremely generous defined benefit pension scheme with a retirement age of 62, and I’m putting money in a separate pension pot on top of that.
Unfortunately, lots of retirees and soon to be retirees don’t have their own private pension pots and therefore are/will be dependent on the taxpayer. The UK only introduced auto-enrolment in 2012 so there will be a lot of people before then who never saved anything, expecting the taxpayer to support them. But the taxpayer is becoming overburdened, which is only getting worse as birth rates decrease and dependency ratios increase.
This is the reality too in America as social security balloons. I’m running off the assumption that I’ll get nothing from the system I contributed and am aggressively saving for my own retirement.
If you want a pension, have the kids to replace the next generation and encourage those kids to do the same
My biggest concern is that despite me saving and investing as much as I can the state will just tax that heavily as well and ask for social security contributions on top.
Have we tried to stop redistributing all the money from the bottom up?