The Pot That Was Never There

The border moved while I was walking towards it

Some of my earliest stamps were paid in Hull, in an insurance broker’s office, at an age when “retirement” was a word that belonged to other people. A slice of every wage packet disappeared into something called National Insurance, and the grown-ups who seemed to know these things assured me it was going into the pot for when I was old. Old was a theoretical country back then. You didn’t plan to visit it. You simply assumed the border would be where they said it was when you finally turned up with your passport.

Fast forward the best part of half a century… through the RAF Police, through years of senior security management, through a life that has ended up, rather improbably, in a cave dwelling in rural Spain with a small band of friends… and I arrived at that border to find someone had moved it. One extra year, calculated against when I first started work. Not a catastrophe, I grant you. Nobody starved. But it was a year I had been told, in plain terms, belonged to me, and somewhere along the line it was quietly reassigned by people I never met, in rooms I was never invited into.

So when the news drifts over from Britain that there’s a new pension system on the way, and some of it genuinely sounds fair, my first instinct isn’t relief. It’s the instinct I spent years sharpening in uniform: who benefits, who pays, and what isn’t being said out loud. Because there’s a simple question nobody in Westminster seems especially keen to answer. What, exactly, does any of this do for the years that have already been taken?

What’s actually on the table

Let’s be fair before we get cross, because fairness is the only thing that makes the crossness worth listening to. Prime Minister Andy Burnham has said he will “adjust” the triple lock, starting in 2030, and use the savings to build a National Care Service. At the moment the State Pension rises each April by whichever is highest of 2.5%, inflation or average earnings growth. Under the proposal, it would rise by at least the higher of 2.5% or inflation, with earnings growth still in the picture but measured over a longer stretch rather than year by year. Martin Lewis, who has spent his career translating Treasury-speak into something a human can follow, describes it as moving from a triple lock to a “2.5 times” lock. In his worked example, three years under the current rules produce a rise of about 12.5%, while the new system produces about 11.4%. A trim, not an amputation.

And I’ll admit the destination has a certain logic. Anyone who has watched a parent or friend disappear into the British care system knows it is held together with goodwill, agency staff and the occasional miracle. Pointing money at it isn’t a scandal. The exact mechanism hasn’t even been published yet, so a good deal of the outrage currently circulating is outrage at a sketch.

But notice what the whole debate is about. It’s about how fast the pension grows once you’ve got it. It says nothing at all about when you’re allowed to start collecting it. The new system is a conversation about the speed of the train, held on a platform where they keep moving the station.

The years nobody is giving back

The station is on the move again as I write. The State Pension age started climbing from 66 to 67 in April 2026 and will finish the job by March 2028. The rise to 68 is already in law for 2044 to 2046, and a fresh review, reporting in 2027 alongside a revived Pensions Commission, could pull that forward. The previous review suggested 2041 to 2043. When somebody recently petitioned the government to bring the age back down to 65, the Department for Work and Pensions replied with the warmth of a parking enforcement notice: there are no plans to reduce State Pension age to 65. Fair enough. At least it was honest, which is more than can be said for the long silence of the 1990s, when the letters that should have gone out didn’t.

Which brings me to the women. Anyone of my vintage remembers when a woman could retire at 60 and a man at 65. The Pensions Act 1995 set out to equalise that, and in 2011 the timetable was sped up so that women’s pension age hit 65 two years earlier than planned. Around 3.6 million women born in the 1950s had the ground pulled from under them, many without anything you could reasonably call notice. The Parliamentary Ombudsman looked into it, found the Department for Work and Pensions had got the communication wrong, and recommended compensation at what it calls Level 4… somewhere between £1,000 and £2,950 per woman. Hardly a lottery win. More of a formal apology with a cheque attached.

The government said no. Then, after a legal challenge forced a rethink, it thought again, and on 29 January 2026 it said no again, pointing to a bill of up to £10.3 billion. Angela Madden, who chairs the WASPI campaign, called it a “disgraceful political choice”. I’d only add that it was a choice, which is the bit politicians always prefer to describe as a constraint. Nothing in the new triple lock tweak, nothing in the age reviews, nothing in any speech I’ve read, restores a single month of what those women lost, or what the rest of us lost in our smaller, less dramatic way. Those years have been banked. Just not by us.

Now for the uncomfortable bit, and I’d rather say it myself than have someone smugger say it for me. There is no pot. There never was. Those stamps I paid in Hull didn’t go into a vault with my name on the door, quietly earning interest until I turned up to collect. They went straight out again to pay the pensions of people who were already old, my grandparents’ generation among them. My pension today is paid by whoever is currently clocking in at a warehouse in Hull or a call centre in Leeds. It’s pay as you go, and it always has been. The State Pension costs roughly £154 billion a year, and every penny of it comes from people still working.

I know how that sounds. It sounds like the moment the magician shows you the false bottom in the box and expects a round of applause. But here’s the thing I keep coming back to, sitting at the mouth of the cave with a coffee and too much time to think. If it was never a savings account, then it was always a promise. A contract, of sorts, between generations, brokered by the state: you pay for them now, and the people behind you will pay for you later, on terms we’ve agreed in advance.

And that, to my mind, makes the case against moving the goalposts stronger, not weaker. You can argue about the investment performance of a fund. You can’t argue your way out of a promise without admitting you broke it. That’s why governments prefer us to keep talking about “our money” and “the pot”… because a pot can be declared empty, regrettably, by people in good suits looking at spreadsheets. A promise, once broken, just looks like what it is.

Taxed going in, taxed coming out

Then there’s the question that genuinely makes my teeth itch. Why is the State Pension treated as taxable income, when it was our income that paid for it in the first place?

Here’s where the grievance stops being pensioner grumbling and starts having a spine. If you pay into a private or workplace pension, you get tax relief on the way in, and you pay tax on the way out. One bite of the cherry, more or less. National Insurance never worked like that. You paid it out of earnings that were also being taxed, with no relief whatsoever, and now the pension it was supposedly buying gets taxed again when it lands. Call it what you like, but from where I’m sitting, it walks and quacks like being taxed twice.

The honest counter-argument, and there is one, is that the State Pension isn’t linked to what any individual put in. It’s a flat-rate entitlement built on qualifying years, so the Treasury treats it like any other income, and for decades it hardly mattered because the pension sat comfortably below the tax-free personal allowance. Then two things happened at once. The triple lock pushed the pension up, and the government froze the allowance at £12,570. The full new State Pension is now £241.30 a week, about £12,548 a year, which leaves it a mere £22 shy of the threshold. Next April it’s expected to rise 3.9% under the triple lock, to roughly £13,036, and sail straight past it. That’s not a policy anyone voted for. It’s fiscal drag, which is Treasury language for letting the numbers do the dirty work so no minister has to.

To be fair, Rachel Reeves, then Chancellor, promised in her Budget last year that pensioners whose only income is the State Pension won’t be taxed on it or dragged into tax returns, and the Treasury has since said it will honour that pledge. The detail of how, as AJ Bell politely put it, remains thin on the ground. And note who it protects: only those with nothing else. Have a small works pension from a job you did in 1987, or a bit of interest on savings, and you’re back in the net. A system that punishes people for having been sensible is a curious way to encourage anyone to save.

The view from the cave

For those of us who’ve swapped grey skies for Spanish ones, that pledge is about as useful as a chocolate fireguard. Under the UK and Spain double tax treaty, the UK State Pension is taxed only in Spain if you’re resident here. It arrives gross, and you declare it on your Spanish return, where it’s added to your other income and taxed at Spain’s progressive rates. Westminster can promise whatever it likes about the personal allowance. It isn’t Westminster sending me the bill. Government service pensions, the kind many ex-forces folk carry, are the exception and stay taxed in the UK, which is a reminder that even the exceptions have exceptions.

I’m not going to pretend we have it hard, though, because some of my fellow exiles have it considerably worse. Living in Spain, I still get the annual rise. Move to Canada, Australia or South Africa, countries without the right reciprocal agreement, and your pension stays frozen at whatever it was the day you left or retired. Hundreds of thousands of British pensioners who paid exactly the same stamps as I did are living on the price of a loaf of bread in whatever year they happened to leave, while the triple lock row rages on without them. If you want a clean example of a contract honoured selectively, there it is.

So from out here, the view is oddly clarifying. The money we paid in buys a different deal depending on your postcode, your birthday and your sex. That isn’t a pension system. That’s a raffle with a very long queue.

Same film, different subtitles

It’s tempting to think this is a uniquely British farce, and Britain does have a gift for farce. But look across Europe, and you’ll find the same script, translated. According to OECD figures for 32 countries, the normal retirement age across the EU is set to rise from 64.7 to 66.7 for men, and from 64 to 66.6 for women. Some countries are going a great deal further. Denmark is heading for 74, Estonia for 71, and Italy, the Netherlands, Sweden and Cyprus for 70. Several have tied the age directly to life expectancy, which is a polite way of saying the finish line will move automatically, so no politician ever has to stand at a podium and announce it again.

The gender question has played out much the same way too. Plenty of European countries once let women retire earlier and have been levelling the ages up rather than down. The difference is in what happens afterwards. Across OECD countries, women receive 23% less in pension income than men, and in the UK the gap is 37%. So British women had their pension age raised to match men’s, often without proper warning, and then retired onto incomes that still lag far behind. Equalisation, it turns out, was applied rather selectively.

As for tax, Britain is hardly the villain of the piece. Treating pensions as taxable income is the norm across Europe. Spain does it, as my own tax return reminds me every year, and Germany has spent the past two decades steadily increasing the share of its state pension that is taxed. If there’s any consolation in that, it’s the cold sort. We’re not being singled out. We’re being processed, along with everyone else, by governments staring at the same ageing populations and the same awkward arithmetic.

The bit where I’m supposed to tie a bow on it

I’d love to end this with a tidy solution, a five-point plan, a rousing call to write to your MP. I spent enough years writing memos to Directors to know how satisfying a neat conclusion can be. But I also know that a neat conclusion is often just a mess with good posture.

Here’s what I think I actually believe. The arithmetic is real. People are living longer, there are fewer workers per pensioner, and somebody has to pay for care. None of that is invented. What sticks in the throat isn’t the maths; it’s the manner. A promise made across generations was rewritten mid-journey, explained badly or not at all, taxed at both ends, and is now being tweaked again under the banner of fairness by people who will mostly never need to worry about any of it. The new system may well be fairer on paper. It does nothing for the years already taken, and nobody has seriously suggested it should.

Somewhere in Britain tonight, a teenager is looking at a payslip and wondering what National Insurance is. Someone will probably tell them it’s going into the pot for when they’re old. I’m not sure whether to hope they believe it or hope they don’t.

Until Next Time