Could the future of the UK state pension be about to get even bleaker? As tax traps on higher earners risk driving young, ambitious workers abroad, experts warn of the ruinous consequences it could have on pensioners.<\/p>\n
Some 28 per cent of 18-30 year olds said they were either actively planning or had seriously considered emigrating when surveyed by the Adam Smith Institute in July this year. The think tank said many were worried about being \u201covertaxed, underhoused and undervalued.\u201d<\/p>\n
The threat of a young worker exodus has economists concerned, not least because it threatens to derail the whole social contract on which the state pension relies.<\/p>\n
The state pension is funded by national insurance contributions from today\u2019s workers, rather than from a national pension fund people pay into over their lifetime. It costs about 5 per cent of GDP a year \u2014 a figure which is projected to rise to 7.7 per cent by 2070, according to the Office for Budget Responsibility (OBR), the fiscal watchdog.<\/p>\n
A mass exodus of high-earning young workers would make it even harder to fund, especially given the birthrate is falling. It was at 1.41 children per women in 2024, down from 1.42 in 2023, according to the Office for National Statistics (ONS). Without immigration the rate would typically need to be 2.1 to maintain a stable population.<\/p>\n
For now, national insurance contributions more than pay for the state pension. This tax year, contributions are expected to raise about \u00a3200 billion, while the state pension costs \u00a3145 billion. This leaves \u201csurplus\u201d cash for other spending, including the NHS.<\/p>\n
For every pound raised in national insurance, the Treasury spends 77p on national insurance-based benefits (including the state pension, sick pay and job seeker\u2019s allowance), leaving 23p spare. <\/p>\n
\u2022 The exact year that the triple lock will bankrupt the state pension<\/a><\/p>\n However, by 2050, widespread emigration could turn the 23p national insurance surplus into a 14p deficit, according estimates by Guiide, a retirement planning platform. This black hole may need to be filled by either raising more tax from a shrinking pool of workers, or making the state pension less generous.<\/p>\n \u201cWe already know we\u2019re in trouble. The OBR forecast shows the cost of the state pension is already rising by 50 per cent over the next 50 years and that\u2019s without emigration \u2014 that\u2019s without the younger, wealthier cohorts of the population up sticks and leaving,\u201d said the pensions expert Tom McPhail<\/a>.<\/p>\n But, as young people face a perfect storm of high taxes<\/a> and even higher living costs, is it any wonder they wish to leave? <\/p>\n The average UK house price was \u00a3273,000 in August\u2014 more than seven times average earnings for a full-time worker (\u00a337,600 a year). <\/p>\n \u2022 No tax, no crime, no free speech. So would you move to Dubai?<\/a><\/p>\n