Can the UK afford to pay pensioners? - some are calling for major reforms - video Dailymotion

Experts warn demographic pressures make pension reforms inevitable.

Transcript

00:00The state pension is something that we invest in through national insurance contributions.

00:06There is a transition arrangement at the moment.

00:09We're going from the 65 for men, and used to be 60 for women, and that's been equalised.

00:16We're actually at the state now where people get their state pension at 66, going up to

00:2067, and eventually to 68.

00:23Now there's a whole view about whether the state pension is affordable in the future,

00:28because of course there is something called the triple lock, which means it's the rate

00:32of inflation, which is set in the previous September, or the average wages, or another

00:40sort of combination, which of course is slightly technical.

00:42But of course what we had in the last couple of years when inflation was running at over

00:4610%, all those pensioners, also those who claim the state pension, we've got a huge

00:51uplift as it really seems.

00:53Britain's pension system faces substantial financial challenges, driven largely by dramatic

00:59demographic shifts.

01:01As the population ages and birth rates fall to historic lows, fewer workers are available

01:06to fund increasing numbers of retirees.

01:10These pressures have sparked urgent calls for pension reform.

01:14Now I'm old enough to remember when the state pension was not particularly brilliant, and

01:19indeed there are a generation of people who are on the old systems, which were sort of

01:23geared, as the expression may sort of indicate, to how much you sort of actually earned and

01:28paid in.

01:29So it's a hugely complicated system.

01:31But of course the most important thing in terms of expenditure is to sort of recognise

01:35how much this is costing the economy.

01:38It's last year over £124 billion, that's bigger than many of the great offices of state

01:45or the departments.

01:46But the real difficulty is that we're in a sort of an economy, or in a sort of a state

01:50if you like, where many more old people are sort of coming to the end of their working

01:54life, the so-called baby boomers, and maybe I'm part of that generation.

01:58We expect to get a pension, but we're having a sort of declining workforce.

02:02So it's becoming lopsided.

02:04You need lots of young people working to pay into the sort of system, which goes out then

02:08to sort of pay pensions.

02:10So there's a big issue about what's going to happen in the future.

02:13And indeed, and I don't wish to set any sort of hairs running, the government are looking

02:17at this, and indeed I've heard the sort of whisper that they're thinking about means

02:23testing the state pension, particularly for people who have a receipt of an occupational

02:27pension and their state pension on top.