As the number of people receiving state pensions relative to the number of people who are paying tax increases the tax must go up, the value of the pension must go down, the state must borrow, or other things must be cut in the budget.
The pension will always be more or less locked because old people vote, and as the % of old people increases, their voting power increases, so it will be increasingly harder to lower the value of the state pension.
Raising taxes has obvious problems, documented everywhere in any kind of economic literature, even if we start taxing up to max laffer, it's incredibly difficult, as working-age people vote, and they hate being taxed. Instead of using that tax money for something fruitful we have to end up subsidising Asda so boomers can buy biscuits or tennents or whatever they're going to consume as pensioners in 10 years.
The state might have to borrow to pay the pension. That's bad, basically. It's not as bad as its sounds, but still bad. Other things being cut in the budget also bad.
The other solution is suddenly that everyone in the tax-paying bracket becomes ultra productive. That's unlikely since our MFP has more or less stalled and shows little sign of increasing, let alone increasingly rapidly.
Basically, pensions have to be privatised or we have to start pumping out tonnes of kids, and fast, and soon, preferably both. Or we could just ignore it and focus on much less important problems instead in order to mobilise an electorate so that we can stay in power.
