Interesting.  There was a lot more I could have said, but nobody would have read it Contributions (tax) depend on earnings, and each individual builds up rights to benefits depending on how much they and their employer(s) have paid in over their working life.  I get a larger pension than my sister because I had higher earnings. Here you pay taxes while you work and government pays you a pension when you're retired.  You noticed that the table I posted? (fifteen minutes to get to look a tiny bit right,) Notice that year they paid out more than they took in... UK government has always used tax income to fund current expenditures. The National Insurance Act worked in the same basic way. At inception the working population dwarfed the retirees. So the weekly tax was enough to pay new pensions to the retired. The retired were dying around three score and ten (70) and pension started at 65, so about five years worth was about the average they hit.. Now they retire at much the same age, and live until they're 85... it's no wonder the idea is going wrong everywhere...