David Peterson retweetledi

Pensions.
This isn't about fairness. It isn't about entitlement. It isn't about who deserves what.
It's about whether the system can keep its promises.
The data says the system is under severe strain.
£8.9 trillion. That's the official ONS figure for the total value of every pension promise made in Britain. State pension. Public sector schemes. Private final salary pensions. Personal pots. Everything combined.
It's also seven years out of date. The ONS last published the figure in 2018 and hasn't refreshed it since.
Build it back up from the latest component data. State pension promises around £6 trillion. Public sector pensions £1.4 trillion. The funded local government scheme £550 billion. Private final salary schemes £1.1 trillion. Personal and workplace defined contribution pots £300 to £700 billion and rising fast.
The current total sits somewhere between £11 and £13 trillion.
This isn't a taxpayer liability. Most of it is your pension. Your neighbour's pension. Your parents' pension. Money savers and employers have built up over decades.
But because pensions are wired into the bond market, the tax system, and the Treasury's balance sheet, what happens to them affects everyone. Even people who don't have one.
For context. UK national debt is £2.7 trillion. Total UK GDP is £2.85 trillion. The pension promises that underpin every retirement in this country are roughly four times the national debt. Around 420% of GDP.
Most of these numbers are not on any official balance sheet you've ever seen. The state pension is classified as welfare, not debt. Public sector pensions sit off the headline national debt figure on a technicality of accounting standards. The biggest financial commitment in British history is hiding in plain sight.
Now let's see if it works.
The state pension. £146 billion a year. Total spending on pensioners, including pension credit and housing benefit, is £175 billion.
There is no fund. National Insurance doesn't go into a pot. It goes straight out the door to today's retirees. This works when you have a growing working population paying in and few pensioners drawing down. We have neither.
The official ratio. 3.4 working-age adults per pensioner today. Falling to 2.7 by the 2070s. But that assumes "working age" means "working." It doesn't. 9.1 million people aged 16 to 64 are economically inactive. 2.8 million on long-term sickness. A record. Over half citing mental health.
Strip those out and the effective ratio of taxpayers to pensioners is closer to 2 to 1. That's an estimate, not an official statistic. But it makes the demographic picture much sharper than the headline ratio suggests. And that's before AI displaces a single job.
The triple lock. The state pension rises every year by the highest of inflation, earnings growth, or 2.5%. Sounds reasonable. It isn't.
Since 2011, the triple lock has added 14% on top of what earnings-only uprating would have delivered. By 2029-30 it's costing £15.5 billion a year more than forecast. Three times what was predicted in 2010.
By the 2070s, the OBR projects state pension spending will rise by around £80 billion a year in today's money. More than half of that increase is the triple lock alone. State pension spending climbs from 5% of GDP today to 7.7% on the central forecast. Possibly 9.1% in a more volatile economy.
In a country with the fourth-worst deficit in Europe, that is a freight train.
And the politics is locked. Over-65s vote at 73%. Under-25s at 37%. Over-55s cast half of all votes. Labour committed to the triple lock. Conservatives committed to the triple lock. On 2 April 2026, Reform UK joined them. Despite Farage previously calling it "up for debate," Robert Jenrick committed Reform to the triple lock at a London press conference. The Centre for Policy Studies called the announcement "disappointing for a party that promised radical change." The IEA called the triple lock itself "an electoral bribe with a compound interest rate."
Every party that could form a government is now committed to it. There is no obvious political route to removing it.
It is a one-way ratchet. Costs only ever go up. Honesty becomes electorally toxic. The triple lock has stopped being a policy. It has become a gravitational force that bends the entire fiscal projection around it.
Public sector pensions. The promise to NHS workers, teachers, civil servants, soldiers, police, firefighters. The people who run the country.
The official liability is £1.4 trillion. Unfunded. No money set aside. Three years ago the same number was £2.6 trillion. Nothing about the pensions changed. The accounting did.
Here's how. To work out what a future pension payment is worth today, you discount it using an assumed return. Higher discount rate, smaller present value. Government bond yields rose. The discount rate rose with them. £1.2 trillion of headline liability vanished from one accounting period to the next. Not a single nurse, teacher or soldier saw their pension reduced. Same people. Same payments. Same dates.
The Treasury has a tool that lets it move trillions on and off the implicit balance sheet without changing a single promise. ICAEW and the Public Accounts Committee have flagged this. Nobody in Parliament has built a political argument out of it.
Worse. The most recent Whole of Government Accounts received a disclaimed audit opinion from the Comptroller and Auditor General. The second year running. 198 local authorities and a major Northern Ireland scheme failed to submit data. The state cannot reliably report what it owes its own pensioners. In any private-sector context, that would be the lead story.
The two-tier system. According to IFS analysis, 47% of public sector workers receive an employer pension contribution of 20% or more of pay. In the private sector, the figure is 2%. Civil service 28.97%. NHS 23.7%. Teachers 28.6%. Police around 35%. Armed forces around 65%. Private sector auto-enrolment minimum employer contribution is 3%. Two countries. One workforce.
This isn't commentary on what's right. It's commentary on what's sustainable. Public sector pension promises are growing faster than the tax base that funds them. The political pressure on this gap will become uncontainable.
Private final salary pensions. The "gold-plated" schemes most people picture when they think of pensions. Guaranteed retirement income based on your salary and years of service.
74% are now closed to new contributions. They're being wound down. Sold to insurance companies in deals called "buyouts" at the rate of £40 to £50 billion of liabilities a year. This isn't a crisis. It's an extinction.
The schemes that built post-war Britain's middle class are being quietly handed to a small number of large insurers, increasingly backed by global private capital. Brookfield. Athora. Blackstone. By 2035, a substantial fraction of British pensions could sit on the balance sheets of six insurers.
If one of those insurers fails, the political and systemic shock would raise questions far beyond ordinary pension regulation. The Bank of England is doing exploratory scenarios. The political class is not. Nobody is pricing this risk.
Personal pensions. What most workers now have. Your pot is whatever you and your employer save into it, plus growth. The auto-enrolment minimum is 8% of qualifying earnings.
The DWP's own analysis. 14.6 million working-age people, 43% of the workforce, are undersaving. On the official adequacy measures, the majority of DC-only savers will fail to hit even a "moderate" retirement standard.
A median earner contributing 8% from age 30 will accumulate around £139,000 in today's money by retirement. The Pensions and Lifetime Savings Association says they need £330,000 to £490,000 alongside the full state pension to fund a moderate retirement.
The 8% delivers between a quarter and a third of what's needed. Auto-enrolment solved coverage. It did not solve adequacy. The honest contribution rate is 12 to 15%. No major political party is willing to say so. The question was punted to a relaunched Pensions Commission reporting after this Parliament.
There's a second timebomb. Pension freedoms, introduced in 2015, let savers access their pots from 55. Most use drawdown rather than annuities. FCA data shows 349,992 drawdown sales last year versus 88,430 annuity sales. Only 30.6% of pots are accessed with regulated advice. The ratio is falling.
The first generation to retire entirely under pension freedoms hits its late 70s and 80s around 2035 to 2040. That's when running out of money becomes systemic, not anecdotal. The state will pick up the cost. Exactly when the demographic dependency ratio is at its worst.
September 2022. UK pension funds nearly imploded over a weekend.
For years, defined benefit schemes had used something called liability-driven investing. Borrowing to buy government bonds to match their pension liabilities. When bond yields rose 170 basis points in five days, those funds faced margin calls they couldn't meet. They started selling bonds to raise cash. Which pushed yields higher. Which triggered more margin calls. A doom loop.
The Bank of England's own research attributes around half the gilt price decline during the crisis to forced selling by pension funds. The Bank announced an emergency facility of up to £65 billion. Actual purchases were £19.3 billion. The Treasury indemnified the rest.
Bond yields surged. Mortgage pricing moved with them. LDI forced selling amplified the stress. Sterling hit a record low. Every homeowner refinancing that autumn paid more.
We came within hours of a pension fund crisis nobody fully understood until it was nearly too late. The post-crisis fixes have helped. The underlying reliance on leveraged hedging has not gone away. The December 2025 Financial Stability Report still flags residual vulnerabilities. The next time bond yields move sharply, we'll find out whether the lessons stuck.
April 2027. Pensions enter inheritance tax for the first time.
Currently, unused pension pots can pass to beneficiaries free of IHT. From April 2027 they're included in your estate. 10,500 estates pay IHT for the first time. Another 38,500 pay more. Average liability rises £34,000. Combined effective tax rate, including post-75 income tax, can reach 67%.
The behavioural response is uncertain. But it is likely to be material. Wealthy retirees may accelerate drawdown. Money may move from pensions into ISAs, investment accounts, and gifts to family. The state spent decades telling people to save into pensions. From April 2027, pensions stop being the most tax-efficient way to do it.
The savings architecture of the country is being quietly rewritten. Nobody is fully modelling what comes next.
Mandation. The state has spent decades telling you to save into a pension. Now it's reaching for what you've saved.
2023. The Mansion House Compact. 11 providers commit 5% of default funds to unlisted UK equities by 2030. Progress as of October 2025 is 0.6%. Far behind target.
2024. The Mansion House Accord. 17 providers covering 90% of active savers commit to 10% in private assets, 5% UK-specific, by 2030. October 2025. Sterling 20. 20 funds for UK infrastructure.
Voluntary, on paper. The Pension Schemes Bill passing through Parliament now contains a clause giving the Treasury statutory power to direct private pension fund investment if the voluntary measures fail.
The House of Lords has rejected this clause three times. Most recently on 22 April 2026, by 234 votes to 152. The Commons has reinstated it three times. The Bill is still in ping-pong between the two Houses. Parliament is expected to be suspended before the King's Speech on 13 May.
There is a real possibility the entire Bill, including unrelated reforms to small pots, defined benefit superfunds, and local government pooling, falls in the next three weeks because the Treasury will not drop one contested power.
The UK is moving closer than comparable pension systems toward an explicit reserve power for ministers to direct private pension investment.
The constitutional question. Should the state direct where your retirement savings are invested? The Lords have answered no, three times. The Treasury has answered yes, three times. Whatever happens in the next three weeks, the precedent is being set.
Why does this matter if you don't have a private pension? You're paying for it anyway.
Through your mortgage. UK pension funds hold around £1 trillion of British government debt. As private final salary schemes wind down, that demand evaporates. The OBR projects pension fund holdings of government bonds falling from 29.5% of GDP today to 10.9% by the 2070s. Yields rise around 0.8 percentage points. £22 billion a year added to debt interest. Mortgage rates and business borrowing both move with bond yields. Every UK homeowner refinancing in the 2030s and 2040s pays more because of pension reforms made now.
Through your taxes. 14.6 million people undersaving will fall onto pension credit, housing benefit, and means-tested social care. The OBR projects 1.2 million additional pensioner renters by the 2040s, costing roughly £2 billion a year in housing benefit alone. That bill comes to you.
Through your council tax. Adult social care is bankrupting councils. Birmingham. Woking. Thurrock. Nottingham. All effectively insolvent. Local government pension contributions are rising sharply, competing in the same envelope as social care, libraries, roads, bins. The Dilnot cap on social care costs was cancelled in July 2024, pushing more risk back onto households and councils alike.
Through systemic risk. The 2022 LDI episode required £19.3 billion of Bank of England intervention with up to £65 billion of Treasury indemnification. That was taxpayer money protecting the pension system from itself. Any future systemic event is paid for the same way.
Through political distortion. Spending per pensioner has risen 170% faster than spending per child since 2004-05. The triple lock costs three times what was forecast and is treated as untouchable by every party that could form a government.
The pensions system is not a private contract between savers and providers. It is a fiscal, monetary and political infrastructure on which everyone in Britain stands. When it strains, the whole country strains with it.
What's likely to happen. Britain doesn't have crashes. It has slow betrayals.
The state pension age will keep rising. 67 by 2028. 68 in the late 2030s. 69 by the 2070s. Means-testing will creep in. The triple lock will be quietly diluted, not abolished. Nobody will give a speech.
Private final salary pensions will finish their extinction by 2040. The middle-class workplace pension that built post-war Britain will exist only in the public sector. Until that's reformed too.
DC savers will start running out of money in their late 70s and 80s, beginning around 2035. The first cohort to retire entirely under pension freedoms reaches that age then. Many will spend faster than is sustainable. The state will pick up the cost.
Insurer concentration in the buyout market grows. Six insurers backed by global private equity hold most of British final salary liabilities by 2035. One major failure would raise systemic questions far beyond ordinary regulation.
The Treasury continues to reach for private pension capital. Mansion House voluntary becomes mandation. If the current Bill falls, the next one reintroduces it. The principle is established.
Mortgage rates and government borrowing costs rise as domestic bond buyers disappear. Debt interest is around £110 billion a year. Up from £39 billion in 2019-20. It crowds out everything else.
Defence. NHS. Pensions. Debt service. Four claims on the same shrinking fiscal envelope. The arithmetic does not work. Something gives.
The candidate for being squeezed is not defence (geopolitical reality). Not the NHS (electoral reality). Not debt service (market reality). It is pensions.
The grinding reform of the British pension settlement that's coming is being driven by a budget arithmetic nobody is willing to articulate publicly.
The OBR's central long-term projection has UK government debt above 270% of GDP by the 2070s. Their judgement that the system is "manageable" comes with one condition. That policy changes.
Policy isn't changing. The numbers are.
The implicit promise was simple. Work. Pay your taxes. Save what you can. Retire with dignity.
That promise is being broken in slow motion. The state pension age keeps rising. Personal pots deliver a third of what's needed. Public sector promises grow faster than the tax base. The Treasury is reaching for what's left.
Nobody will announce the failure. It will just happen. One year. One rule change. One quiet reform at a time.
A 25-year-old today, contributing the auto-enrolment minimum, will retire onto a state pension paid by a smaller working population, plus a private pot worth a third of what they need, in a country whose mortgage rates, council services, and tax base are all bearing the cost of provision their parents and grandparents didn't make.
This isn't a question of whether £12 trillion of promises were the right ones to make. It's a question of whether they can be kept by a system running out of ways to fund them.
The arithmetic is already in.
We just haven't told anyone yet.
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