Most pensioners are likely to deny their old age pension is a benefit. They would assert they have paid in for it. The wilful misunderstanding we British go in for. What would be interesting would be lifetime figures. That would show if I had indeed paid for my pension and if my net lifetime contribution was positive or negative.
It's not a wilful misunderstanding. It's genuine lack of knowledge and a belief that Ni is a form of saving that was tacitly encouraged for years.
I recall how surprised I and others all were on the first morning of our first training course as budding civil servants a few decades ago when we learned that NI is a jobs tax and that State Pensions are paid from current revenue and not from a Pension Fund built up from National Insurance Contributions. After all National Insurance Contributions sounds like saving into an insurance fund and there is even something called a National Insurance Fund.
When we asked the Treasury Civil Servant explaining basic government finance to us why the misunderstanding was allowed to continue he said that governments found it convenient because people resented paying NI less than other taxes when it felt like a form of saving for retirement. That will have been a Treasury Joke (you get used to them) but one that I think has a foundation in reality. At any rate there has never been any worthwhile effort from Government to explain how NI and pensions really work though the public misconception was well-known.
And now it's biting.
More people do now know how NI and pensions really work, because plenty of non-government sources can explain, but understanding is still far from universal even amongst younger people.
I've got a pre-typed explanation that I trot out online when I come across the idea that NI is like saving and pays for your pension. Often it is not believed.
When I explain it to fellow-pensioners in person they are astonished and then often either remain incredulous or become angry as a decades-long certainty that they've built up their own pensions is challenged.
Government reasoning would appear to have been that the working and retired populations would always be in balance or the economy would be growing enough that the cash for pensions could always be found so "why bother people about it and annoy them?". And here we now are, with a major fiscal problem and a population allowed to feel that they've been paying "in" and saving all their lives who need suddenly to understand that they have not and that the system needs revising to be fairer to today's workers and to survive.
Who expects explaining and sorting that out to go well? Who expects it to improve trust in government?
And loftily treating people who have long held a false belief in good faith as though they are idiots or wilfully stubborn merely makes them feel that they have been taken for fools by government and rams their noses in it. It doesn’t work.
But much of the commentariat from the New Statesman to the FT via the Guardian and the IFS is doing just that. It’s a symptom of the political blindness that feeds populism.
You will gather that I feel this is no way to do either government or political discourse. There are better ways of having a long overdue conversation about generational rebalancing
This is the most interesting question. The Resolution Foundation did some work a couple of years ago that showed the average Baby Boomer would receive £250k more in benefits than they had paid in taxes. This seems right to me - vote for Thatcher to reduce taxes while you are working, spend the North Sea oil revenues, sell off state assets cheap (to Baby Boomers) then vote for handouts (triple lock, healthcare, WFA…..) when you are old……paid for by the taxes of hard working, ambitious younger people. I almost forgot the tax free appreciation in house values driven by falling real interest rates. I am a Baby Boomer but I do have four kids who may all end up emigrating if this madness continues.
I am surprised there aren't far more people in the "Don't know" bracket, considering the complexity of the question: how does anyone know the balance between ALL benefits received, and ALL taxes paid, by themelves?
We never see a "State benefit" price tag on a "free" NHS GP appointment, or for vaccination by a nurse. Who knows what a subsidy on bus fares might be--unless it's a Burnham campaign. What is the cost of your child's state education?
Whereas people are all too aware of figures on a PAYE slip, and 20% VAT on most consumer goods, including fuel duty.
I dimly remember seeing a board up in some hospital waiting area, that stated the cost to the hospital of last-minute cancellations and missed appointments. But not very convincing, or why were there still such long waiting times despite people not turning up? Surely they'd already figured no-shows into the appointments system.
And even were it true, it seemed a bit pointless after the event: a plea to regular outpatients perhaps, if they saw the board often enough. But for individual impact it needed to state cost-per-missed-appointment in wasted specialist time. A global amount for total missed appointments was too abstract.
Perhaps Burnham needs an individually-focused awareness campaign with a lot of state benefit price tags, to wake up ignorant and ungrateful voters to the reality of redistributive state largesse. It might still not feel like enough, but at least perception might match reality.
"I am surprised there aren't far more people in the 'Don't know' bracket, considering the complexity of the question: how does anyone know the balance between ALL benefits received, and ALL taxes paid, by themelves?"
This is a well-known phenomenon in all survey research: people feel embarrassed to admit that they don't know, so they give a yes or no answer which is not based on any cognitive effort whatsoever. This used to be exacerbated by face-to-face interviewing, but it persists even in online polls. It has even been experimentally shown to exist, by making polls a quiz where there are monetary rewards for giving each right answer and penalties for giving each wrong one. The proportion of don't knows surges dramatically.
Thank you--I didn't know this: and will duly be far more suspicious of tiny "don't know" survey figures in future. A bit depressing, though, that accurate survey results are so hard to come by.
I wonder whether a fundamental part of the problem faced by politicians in general is the availability heuristic. If frequent and often lurid stories of benefit cheats and work avoidance appear in parts of the main stream media and are promoted by social media algorithms, readers will identify the net recipients of benefits as such ‘others’ rather than themselves. This serves a particular narrative that portrays taxes as ‘taking from me and giving to them’. Identifying this is one thing, however, but counteracting the effect presents significant challenges. It seems that Burnham is aware of the problem - hence his strategy of dripping out the policy announcements.
Bloody social media and the internet sucks any optimism dry. Our msm pundits are hell bent on division, short news and anything that creates outrage. Perception begins in our minds. We are hostage to an algorithm of uncertainty and whataboutery. Who’s coming with some answers and solutions to replace the endless stream of info and questions? #EnoughAlready #GetStuffDone
The pattern is strikingly like with Brexit (although there it took a strong campaign to make people believe they contribute more than they receive)... Quite ironic, unless I missed the 350 million per week arriving to the NHS :)
These data are fascinating. I'm no ingrate and have no problems with the taxes I pay, but it would never have occurred to me that I receive as much or even more than I contribute. It's a story that needs telling in different ways (on repeated occasions) for it to land.
I think part of the explanation for the mismatch between what we think we get and what we actually get is the fact that we view individual benefits like health and education as a collective benefit. It is seen as a “right” rather than a benefit.
But the other point is that the last 20 years of Blair Brown and Cameron /Johnson /may /truss / Sunak has led to a much more progressive tax system. High income people pay a higher proportion of tax and lower income pay a lower proportion. Hence why average net benefit ratios have declined.
There is a political trend to want to come up with a Big Retail Offer - which usually means a collection of small giveaways here and there (like Starmer’s 10% off Alton Tower tickets). Obviously, people bank the benefits. But I’m not sure it ever translates into any kind of solid polling benefit.
Ultimately, people care about how much they earn and how much tax they pay. On the former they will tend to ascribe any increase increases in salary to their own actions. But general unemployment and difficulty in getting a job or moving up the ladder will definitely be considered the government’s fault. On the latter if they’re not getting their mini pay rise from the government every year as a result of tax threshold changes and if they see an ever increasing part of their salary going straight to the government (and our student loans company) then they will definitely put that at the door of the government.
My advice to labour would be focus on jobs employment (and therefore employers) and marginal tax and tax thresholds. Everything else is peripheral from a polling perspective. For example 5% off electric electricity bill bills won’t be noticed. The problem that they need to sort out with electricity is the structural problem about the UK having the highest industrial electricity in the world - the VAT cut does nothing for this.
Thanks Peter. This is very illuminating. Who knows the “why” but govt should invest more in explaining eg similarly to the annual tax burden summary provided to self assessors but spread wider. I appreciate it is inexact asa stat but illustrative can be best
To enlarge Somewhat on what @Graham said. Since we're talking about perception, then you bet that pensioners perceive they've paid for their pensions. This is explicitly part of the National Insurance contract: your state pension is absolutely linked to the years you've paid in, and you can go on. gov.uk and see the calculation.
I was disappointed that you didn't put in some qualifier about NI, particularly given it's role in encouraging or discouraging new job creation.
And yet if you live for more years in retirement than you worked, you can still get that state pension and associated benefits such as free bus travel. It isn't quite a savings scheme.
On Nicky Campbell this morning - a night club owner grateful for the help but saying it's not enough. A hairdresser saying we need help and got nothing. Somehow the question of severely restricted public finances is pushed into the background when "ordinary people" are interviewed. The public are never wrong - even though the vast majority of the decisions which have led to our economic frailty have been carried out by Governments, democratically elected, their policies enacted in full public view.
Proportional representation, stronger workers rights, better media accountability, and limiting money's role in politics are all costless policies he can implement that most agree with. We'll just have to see if he has the spine to do it, Keir Starmer obviously did not and I doubt Andy will either.
Why do you include this statement so early in your article:”Here is Burnham’s fundamental problem.” It colours everything you say negatively IMO. Good article but such a statement not necessary I felt.
You're right, of course. It is shocking but most people haven't got the vaguest idea about the costs of public services they receive (e,g, NHS) and they don't think of the state pension as a "benefit"; it's something that they've paid for through their NI contributions.
Most pensioners are likely to deny their old age pension is a benefit. They would assert they have paid in for it. The wilful misunderstanding we British go in for. What would be interesting would be lifetime figures. That would show if I had indeed paid for my pension and if my net lifetime contribution was positive or negative.
It's not a wilful misunderstanding. It's genuine lack of knowledge and a belief that Ni is a form of saving that was tacitly encouraged for years.
I recall how surprised I and others all were on the first morning of our first training course as budding civil servants a few decades ago when we learned that NI is a jobs tax and that State Pensions are paid from current revenue and not from a Pension Fund built up from National Insurance Contributions. After all National Insurance Contributions sounds like saving into an insurance fund and there is even something called a National Insurance Fund.
When we asked the Treasury Civil Servant explaining basic government finance to us why the misunderstanding was allowed to continue he said that governments found it convenient because people resented paying NI less than other taxes when it felt like a form of saving for retirement. That will have been a Treasury Joke (you get used to them) but one that I think has a foundation in reality. At any rate there has never been any worthwhile effort from Government to explain how NI and pensions really work though the public misconception was well-known.
And now it's biting.
More people do now know how NI and pensions really work, because plenty of non-government sources can explain, but understanding is still far from universal even amongst younger people.
I've got a pre-typed explanation that I trot out online when I come across the idea that NI is like saving and pays for your pension. Often it is not believed.
When I explain it to fellow-pensioners in person they are astonished and then often either remain incredulous or become angry as a decades-long certainty that they've built up their own pensions is challenged.
Government reasoning would appear to have been that the working and retired populations would always be in balance or the economy would be growing enough that the cash for pensions could always be found so "why bother people about it and annoy them?". And here we now are, with a major fiscal problem and a population allowed to feel that they've been paying "in" and saving all their lives who need suddenly to understand that they have not and that the system needs revising to be fairer to today's workers and to survive.
Who expects explaining and sorting that out to go well? Who expects it to improve trust in government?
And loftily treating people who have long held a false belief in good faith as though they are idiots or wilfully stubborn merely makes them feel that they have been taken for fools by government and rams their noses in it. It doesn’t work.
But much of the commentariat from the New Statesman to the FT via the Guardian and the IFS is doing just that. It’s a symptom of the political blindness that feeds populism.
You will gather that I feel this is no way to do either government or political discourse. There are better ways of having a long overdue conversation about generational rebalancing
This is the most interesting question. The Resolution Foundation did some work a couple of years ago that showed the average Baby Boomer would receive £250k more in benefits than they had paid in taxes. This seems right to me - vote for Thatcher to reduce taxes while you are working, spend the North Sea oil revenues, sell off state assets cheap (to Baby Boomers) then vote for handouts (triple lock, healthcare, WFA…..) when you are old……paid for by the taxes of hard working, ambitious younger people. I almost forgot the tax free appreciation in house values driven by falling real interest rates. I am a Baby Boomer but I do have four kids who may all end up emigrating if this madness continues.
I am surprised there aren't far more people in the "Don't know" bracket, considering the complexity of the question: how does anyone know the balance between ALL benefits received, and ALL taxes paid, by themelves?
We never see a "State benefit" price tag on a "free" NHS GP appointment, or for vaccination by a nurse. Who knows what a subsidy on bus fares might be--unless it's a Burnham campaign. What is the cost of your child's state education?
Whereas people are all too aware of figures on a PAYE slip, and 20% VAT on most consumer goods, including fuel duty.
I dimly remember seeing a board up in some hospital waiting area, that stated the cost to the hospital of last-minute cancellations and missed appointments. But not very convincing, or why were there still such long waiting times despite people not turning up? Surely they'd already figured no-shows into the appointments system.
And even were it true, it seemed a bit pointless after the event: a plea to regular outpatients perhaps, if they saw the board often enough. But for individual impact it needed to state cost-per-missed-appointment in wasted specialist time. A global amount for total missed appointments was too abstract.
Perhaps Burnham needs an individually-focused awareness campaign with a lot of state benefit price tags, to wake up ignorant and ungrateful voters to the reality of redistributive state largesse. It might still not feel like enough, but at least perception might match reality.
"I am surprised there aren't far more people in the 'Don't know' bracket, considering the complexity of the question: how does anyone know the balance between ALL benefits received, and ALL taxes paid, by themelves?"
This is a well-known phenomenon in all survey research: people feel embarrassed to admit that they don't know, so they give a yes or no answer which is not based on any cognitive effort whatsoever. This used to be exacerbated by face-to-face interviewing, but it persists even in online polls. It has even been experimentally shown to exist, by making polls a quiz where there are monetary rewards for giving each right answer and penalties for giving each wrong one. The proportion of don't knows surges dramatically.
Thank you--I didn't know this: and will duly be far more suspicious of tiny "don't know" survey figures in future. A bit depressing, though, that accurate survey results are so hard to come by.
I wonder whether a fundamental part of the problem faced by politicians in general is the availability heuristic. If frequent and often lurid stories of benefit cheats and work avoidance appear in parts of the main stream media and are promoted by social media algorithms, readers will identify the net recipients of benefits as such ‘others’ rather than themselves. This serves a particular narrative that portrays taxes as ‘taking from me and giving to them’. Identifying this is one thing, however, but counteracting the effect presents significant challenges. It seems that Burnham is aware of the problem - hence his strategy of dripping out the policy announcements.
These stories resonate because they amplify gossip shared daily by a high proportion of voters.
Bloody social media and the internet sucks any optimism dry. Our msm pundits are hell bent on division, short news and anything that creates outrage. Perception begins in our minds. We are hostage to an algorithm of uncertainty and whataboutery. Who’s coming with some answers and solutions to replace the endless stream of info and questions? #EnoughAlready #GetStuffDone
The pattern is strikingly like with Brexit (although there it took a strong campaign to make people believe they contribute more than they receive)... Quite ironic, unless I missed the 350 million per week arriving to the NHS :)
These data are fascinating. I'm no ingrate and have no problems with the taxes I pay, but it would never have occurred to me that I receive as much or even more than I contribute. It's a story that needs telling in different ways (on repeated occasions) for it to land.
Thanks. So interesting.
I think part of the explanation for the mismatch between what we think we get and what we actually get is the fact that we view individual benefits like health and education as a collective benefit. It is seen as a “right” rather than a benefit.
But the other point is that the last 20 years of Blair Brown and Cameron /Johnson /may /truss / Sunak has led to a much more progressive tax system. High income people pay a higher proportion of tax and lower income pay a lower proportion. Hence why average net benefit ratios have declined.
There is a political trend to want to come up with a Big Retail Offer - which usually means a collection of small giveaways here and there (like Starmer’s 10% off Alton Tower tickets). Obviously, people bank the benefits. But I’m not sure it ever translates into any kind of solid polling benefit.
Ultimately, people care about how much they earn and how much tax they pay. On the former they will tend to ascribe any increase increases in salary to their own actions. But general unemployment and difficulty in getting a job or moving up the ladder will definitely be considered the government’s fault. On the latter if they’re not getting their mini pay rise from the government every year as a result of tax threshold changes and if they see an ever increasing part of their salary going straight to the government (and our student loans company) then they will definitely put that at the door of the government.
My advice to labour would be focus on jobs employment (and therefore employers) and marginal tax and tax thresholds. Everything else is peripheral from a polling perspective. For example 5% off electric electricity bill bills won’t be noticed. The problem that they need to sort out with electricity is the structural problem about the UK having the highest industrial electricity in the world - the VAT cut does nothing for this.
Thanks Peter. This is very illuminating. Who knows the “why” but govt should invest more in explaining eg similarly to the annual tax burden summary provided to self assessors but spread wider. I appreciate it is inexact asa stat but illustrative can be best
To enlarge Somewhat on what @Graham said. Since we're talking about perception, then you bet that pensioners perceive they've paid for their pensions. This is explicitly part of the National Insurance contract: your state pension is absolutely linked to the years you've paid in, and you can go on. gov.uk and see the calculation.
I was disappointed that you didn't put in some qualifier about NI, particularly given it's role in encouraging or discouraging new job creation.
And yet if you live for more years in retirement than you worked, you can still get that state pension and associated benefits such as free bus travel. It isn't quite a savings scheme.
To paraphrase Father Ted “that would be an actuarial matter”.
Agreed, NI looks like a savings scheme, and successive governments have been happy not to disabuse the plan members of this notion.
On Nicky Campbell this morning - a night club owner grateful for the help but saying it's not enough. A hairdresser saying we need help and got nothing. Somehow the question of severely restricted public finances is pushed into the background when "ordinary people" are interviewed. The public are never wrong - even though the vast majority of the decisions which have led to our economic frailty have been carried out by Governments, democratically elected, their policies enacted in full public view.
Terrific piece and eye opening!
Thank you very much for this. A real eye-opener.
This problem will come to the fore when Burnham tries to tackle finance for Adult Care.
https://www.theguardian.com/commentisfree/2026/jul/24/my-generation-scared-care-tax-andy-burnham-ageing-well?CMP=Share_AndroidApp_Other
Proportional representation, stronger workers rights, better media accountability, and limiting money's role in politics are all costless policies he can implement that most agree with. We'll just have to see if he has the spine to do it, Keir Starmer obviously did not and I doubt Andy will either.
None of those are costless for any PM who tries to push them through the UK's creaking legislative processes!
zero impact on the chancellor's budget. It just costs willpower.
Why do you include this statement so early in your article:”Here is Burnham’s fundamental problem.” It colours everything you say negatively IMO. Good article but such a statement not necessary I felt.
Lol look at how deluded the boomers are. As you note, 90% of them are net beneficiaries, but only 14% realise this.
You're right, of course. It is shocking but most people haven't got the vaguest idea about the costs of public services they receive (e,g, NHS) and they don't think of the state pension as a "benefit"; it's something that they've paid for through their NI contributions.
So, deluded yes, but also financially illiterate.