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In last month's budget, the Chancellor's decision to cut workers' national insurance contributions

by a further 2P wasn't particularly remarkable.

But Jeremy Hunt's suggestion that NIsI. should eventually be scrapped altogether,

most certainly was. National insurance is usually thought of as the way we fund the state pension,

so cutting it raises serious questions about the future of the pension. And that's even before

you consider our ageing population.

Are the rapidly rising costs of the current system sustainable for the retirees of tomorrow?

And if not, what do we do about it?

Step inside the briefing room and together we'll find out.

First, how does the state pension system actually work? Who gets what? How much does it cost?

And how's it paid for? Joining me in the briefing room are Paul Johnson, director of the Institute for Fiscal Studies, and Paul Lewis, financial journalist and presenter of Radio 4's Moneybox.

Paul Lewis, give us a quick history lesson. When was the state pension introduced and who was back then eligible to get it? Well, the first payments were made on 1st of January, 1909. It was introduced

by Lloyd George. To get it, you had to be 70. There was a sort of means

test that you didn't have to have sort of massive assets. And the best thing was you had to be

an approved person. You had to go before a committee as a person of good character.

You got five shillings a week, 25 pence,

equivalent to about 25 or 30 pounds now. What was actually the purpose of that first state pension?

What was it trying to do? It was simply really to relieve poverty, the absolute complete poverty

people might have if they were beyond the age when they could work,

they had no family to support them or help, or maybe they were very poor as well.

And to reflect, I think, that people had worked all their lives,

...