State Pension Pot Jeremy Hunt
Pick up your annual tax summary from HMRC and you will see 10pc of what the Government takes from you goes towards the state pension.
It gives the impression that you, the taxpayer, are storing up a substantial nest egg to protect you in retirement.
The phrase “National Insurance Contributions” (NICs) suggests that this tax goes into a fund that will be there to pay our state pension on retirement, or help with benefits should you need them.
Unfortunately, anyone who gets that impression would be terribly mistaken. The money is not saved – taxes and NICs that are paid to HMRC today go straight out the door to pay pensioners who are currently claiming their retirement benefits.
Each generation’s pensioners rely on the taxes of younger workers, an intergenerational compact that relies on continued participation.
In the second of our three-part series on…