So look, the state pensions are benefits, and
for those long -term listeners, I'm not gonna
get into that argument again if there are too
many times, but it has, as a universal benefit,
become increasingly expensive in recent years.
And the Bank of England governor, Andrew Bailey,
did a lecture this week at Leicester University
where he did a pretty staff message about the
UK economy, and he actually blamed the aging
population in the UK. for hampering the country's
struggling growth prospects. ASBG highlighted
the 15 -year stagnation in productivity that's
been dragging down standards. What he actually
said was, the story of growth is, I'm afraid,
quite clear. It has slowed markedly in the last
15 years or so, and this has advanced, this has
affected the advance of living standards. Now,
he also talked about other strong headwinds against
the economic growth, including the aging population,
as I said, plus potential US tariffs. And what
he did say about the aging population and what
he describes as a natural end to the increasing
female workforce participation. Future growth
can't rely on more workers. And what he said
is that the reality puts more emphasis on productivity
and technological change as the drivers of growth
to come. He stressed that some quite large technical
advances will be needed to restore pre -financial
crisis growth rates. So what he was doing is
highlighting that the age of population presents
a pretty significant challenge to economic growth
with fewer female workers entering the labor
market now because so many women over the past
20 years have joined the the employment market.
This has come to pretty much a natural end really.
So he says that the UK faces structural limitations
on workforce expansion. It feels sensible. Now
these economic challenges coincide with... more
and more pressure on government finances from
the state pension costs. And you know, they actually
account for 46 % of the DWP's annual spending,
46%. So the state's pension bill reached 124
billion in 2324 and is actually projected to
rise to 169 billion by the year 2029. This represents
143 % increase since 2010, just over 7 % every
single year over two decades. Now Edmund Greaves
is an editor at Malfi Money and he said, unlike
other benefits, the state pension is not means
tested. This means significant number of pensioners
in receipt of state pension simply don't need
it. And you know, He also said former governments
have taken steps to make the state pension bill
cheaper and this has included raising the state
pension age as we all know, equalising the age
between genders as we all know and other tweaks
to make the bill more affordable. One thing he
went on to say, but while income is subject to
direct taxation, the variety of tax -efficient
tools available, such as ISA pensions and other
sources of wealth, means in practice the government
will struggle to claw back significant amounts
of state pension given to wealthy retirees. Now
to date, the UK government has avoided the question
of means testing. Now the state pension level
is at This kind of an inflection point really.
For the first time for the next year, government
will start to directly claw back a proportioned
estate pension through the income tax system
as the annual entitlement tips over the personal
allowance. And that's true, but it's only just
over the limit. So it won't bring in a massive
amount. But it will bring in more and more each
year if the personal allowances aren't increased.
He went on to say, This means the poorest pensioners
with no access to finance advice now face being
taxed on their state pension income while well
-off retirees can simply move money around to
avoid additional tax liabilities. Now, I mean,
that's a tough read, that really, isn't it? If
we're in retirement age, but you talk to a group
of 25, 30 -year -olds and they'll pretty much
agree with everything he says there. Now, I'm
reading a lot in the press now and me and Cestan
is very much back on the agenda of the state
pension. I mean, Australia has been doing it
for years and with all this talk of benefits
cuts and yes, the state pension is a benefit.
The thing is, a lot of the studies now say that
we can actually afford to maintain a state pension
up to 2036. That's the year I get my state pension.
We've got away with it now because a lot of women
have been joining the workforce over the last
20 years, increasing that, but going forward,
we're not gonna increase the workforce anymore.
And those who were in the comments are gonna
say, well, you know, it's all about my immigration.
Well, actually, if you look at the studies, we're
talking about 150 million here. Some studies
say they actually contribute to the economy.
On average, they say it's about two billion a
year, two billion against 150 billion. Fixing
migration is not gonna help here with this, guys.
So real worry for any of us who are approaching
state pension age. What I would say, and this
is my view, and that's all I can give you, is
that if you're all 60 plus already. I don't think
this will affect you. I think the time it would
take to get this embedded through law and into
practice, I think if you're over 60 already,
there's a good chance mean testers that are gonna
affect you. I'm 55. I've got 11, 12 years before
I start drawing my pension and that's a lot of
time really for different governments to come
in and make changes for the climate. a political
climate to change and turn against the elder
generation as, if you look in the comments in
a lot of my recent videos, you'll see a lot of
younger people blaming us as kind of elders for
stealing them of their future and all that kind
of stuff. I don't believe any of that, by the
way. But I think for me, we're at the top of
this inflection point being in 12 years time.
I think there's a chance I will be impacted by
me incessant of my pension. Now, I don't think
I'll lose all my state pension because I think
it will be tiered, but I do think it's a reality
that, you know, and I am kind of bracing myself
for not having as much in my budget when I hit
67 as I expected, because I do have some private
pensions. So hate to be bringing this up again.
It does seem to raise its head again, but it
does seem to be all over the press this week.
If you've heard anything different or got some
observations about it, please leave them in the
comments and I'll see you in the next one. But
don't worry guys, if you are approaching state
pension age, I don't think this is a worry for
you. It's for those of us. who are kind of in
our mid fifties who I think potentially could
be impacted by that. And that's only based on
what I'm reading. Cheers then.