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In this I want to propose an approach to two issues – youth unemployment and pensions for younger people.
Youth unemployment has recently hit the news. As of the final quarter of 2025, the unemployment rate for 16-24-year-olds stands at 16.1%, the highest in a decade and now exceeding the EU average of 14.7%. Total UK unemployment is at 5.2%, a five-year high, but young people are disproportionately affected, with entry-level hiring stalling amid higher payroll costs from the 2025 National Insurance (NI) hike to 15% and minimum wage increases.
Meanwhile given the UK’s declining birth rate, England and Wales hit a record low of 1.41 in 2024 – well below the 2.1 replacement level. These changes in demographics make the present method of funding pensions arguably unsustainable in the long term, with fewer workers having to support an ageing population. The current state pension essentially functions as a Ponzi scheme, and is seen by many young people as funding method via NI that they might never benefit from. And it is to be noted that the infrastructure is in place now for people to directly contribute to their own pension pots now, whereas NI just ends up in general taxation.
On top of this is the move to defined contribution pensions and away from defined benefit pensions. Far too many adults do not save for retirement, and nearly 40% are under saving. This is going to lead to massive problem in the future, where many are focused on the short-term cost of living and trying to get a house, while under saving on their pension. Put on top of that the fact that in nations with declining birth rates, eventually the real value of housing is eroded in the long term because of falling demand. These factors combine to set up a trap for young people.
There are arguments that are Liberal, well justified and should be made – because right now young people are being shafted by a large confluence of factors:
- Increased costs of being employed under Labour reducing number of jobs available
- The effect of AI reducing graduate jobs to a new low
- High cost of living due to flawed energy policies and low house building
- The freezing of tax thresholds eroding the take-home pay of even the low waged
- High costs associated with child rearing, removing positive liberty and resulting in smaller families
- Paying for the pensions of the elderly while birth rates are declining, making it less likely the state will pay them a pension by the time they retire
- Having to repay student loans and step onto the housing ladder together – reducing the ability to pay and save for pensions
The following ideas don’t set out to resolve all of these but can hopefully be a start.
Youth Unemployment
While there are many different approaches to solving this – my plan is to make it cheaper for businesses to hire younger workers. One approach could be to tweak the minimum wage, but that isn’t one I will propose. Instead, I would target employers’ national insurance, an additional cost to hiring young workers, by reducing the current 15% rate for this group, potentially to zero – to make it cheaper for businesses to hire them and start their careers.
This would of course reduce revenue, but it should make it easier for businesses to hire more young people, with the additional benefits of reducing benefit payments, which would partly offset these costs.
Reducing the minimum wage for young workers is only beneficial to those between proposed minimum wage thresholds. But I do believe younger workers should be paid more, the cost of living doesn’t just disappear just because you are young – and the young still need to save for the future.
For businesses the choice is largely to do what benefits them – and younger workers are going to be less experienced. But that cost is not only via what they pay a worker, but also what they pay the taxman. For a worker earning 25k – the removal of having to pay employers NI is a saving of 3k.
And there is of course for moral case for getting younger people into employment and giving them more purpose day to day. Labour’s approach has been a disaster, which has combined with the coming of AI. The issue is how much these changes would costs businesses.
Pensions and Compound Growth
Compound growth is ultimately something we need to use to its fullest potential to mitigate the possibility that pensions will end up bring inadequate. The sooner money is saved the better, whether that is parents opening up junior self-invested personal pensions for their children, or workers oversaving early in their working lives.
Today many are under saving, and there is an incentive for governments to harm the long term by bringing forward revenue and tax to the present. No doubt the Treasury is contributing to this problem as well, but this isn’t widely recognised. If it was, every responsible parent would open up a junior SIPP for their children, yet how many even know what one is?
Another factor is pension company management fees charge, which erode growth. Some are lower than others, but employees may have no choice in the matter.
My first proposal here would be to have the government pay a fixed amount pension fund auto enrolment fees. In the long term this would grow pension pots faster. And why a fixed amount? – to benefit lower paid workers more than higher paid ones. The goal would not be to subsidise pension schemes but to ease the burden on employees who have no choice of scheme.
My second proposal would be to start put £200 into a junior SIPP for each newborn, to raise awareness of them and to maximise compound growth to its fullest by maxing out the time for growth. I would also encourage parents to top this up for their children.
A third proposal would be to reduce the rate of employers’ national insurance, and increase the rate that employers must contribute into their employees pensions. For example, maybe a 4% reduction in employers NI, combined with an increase to employers’ pension contribution of 4% plus tax relief of 1% on top. And because this could total a large amount of lost tax revenue – target this at workers under 30 or 35, and maybe be at a lower rate, depending on short term budgetary considerations. In the long term, this additional funding towards DC pensions could have a massive impact.
Because ultimately – why does national insurance need to exist to pay for pensions, when workers could build their own pension pots without it? The infrastructure exists to do this now, and introducing it would abolish the present inter-generational unfairness.
Conclusion
The underlying thrust of the above is to put long-term interests over short term ones, for the betterment of the country and younger people, which to me is a no brainer.
But given the current political prioritisation of pensions and the triple lock, even at the expense of graduates and tuition fees – it’s clear who parties are chasing. And a clear focus on short term electoral success rather than doing what is right and needed in the long term.
The Greens have become more popular among the young because they choose to listen. And act on it. The Greens may be perceived as radical, and we may want nothing to do with them – but radicals and extremists make gains when the moderates and centrists choose to bury their heads in the sand and make no arguments at all.
Our party has one of the oldest memberships in the country, if not the oldest. But I am sure even the oldest members care about their children and grandchildren. Old people are not immoral, at least I hope not. The case needs to be made for less of a focus on the priorities of older people, and more on a rebalancing of finance policies towards younger people.
There will be a transitional fiscal cost, but this is an investment in future sustainability. If we can justify going green by paying more upfront costs in exchange for long term benefits – let’s do this too.
