Britain is a nation of pensioners, around a quarter of the population. It’s now predicted that the state pension might next year be raised by 8% – thanks to the so-called triple lock.
The Treasury Chancellor, Rishi Sunak has twice refused to guarantee that the increase would go ahead on that scale next April when it was pointed out that Universal Credit payments to low-earners are about to be cut. Asked if it was “fair” that pensions could leap by 8 per cent as universal credit is cut, Sunak said: “I think they are completely legitimate and fair concerns to raise.
Many politicians have taken advantage of the discrepency between young and old to create debate about Britain’s pension entitlements. After the financial crash, the 50% of young people who attend university had tuition-fee increases that raised their student debt to an average of £45,000; youth services faced virtual disintegration after 70% cuts, and home-ownership among the young has collapsed, to be replaced by the insecurity of the private rented sector.
Over the past decade, workers in their 20s and 30s have had the worst pay squeeze, and they’ve been hammered by cuts to social security entitlements ranging from housing benefits to tax credits and the looming cut to universal credit. The sacrifices made during the pandemic were mainly to protect older citizens.
Pensioners receive winter fuel payments and free bus travel, and more than three-quarters own their homes outright. Many have benefited from the surging house prices that have locked the young out of the property market. Pensioner poverty rates have fallen steeply.
Nonetheless, there remain 1.9 million pensioners condemned to poverty.
According to the Trade Union Congress, if Britain scrapped the triple lock in favour of an earnings link, £700 a year would be cut by 2050, driving 700,000 pensioners into poverty.
We are told that our pensions system is so unaffordable that by the time today’s young enter retirement it will have collapsed anyway. The UK spends significantly below the OECD average as a proportion of its economy and is beaten by countries including Colombia, Slovakia and Hungary. Far from undermining the state pension and portraying it as an indulgence for baby boomers, the argument should surely be that it is completely insufficient: an 8% rise is not enough.
The reason the triple lock benefits the young the most is that every year it accrues more in value: so in 20 years’ time, for example, it will be worth far more to someone in their 40s today. With so many younger people not saving for private pensions until middle age – worsened by the current national emergency – they will come to depend on the state pension all the more. Given private pensions impose thousands of pounds worth of costs on individuals over their lifetime, is it not better to rely on progressive taxation to fund a generous state entitlement instead?
Those wishing to scrap the triple lock would condemn the young to the worst of all worlds: insecurity not only in their youth but in their final years too. Youth services and social entitlements should not be paid by driving pensioners into poverty: robbing elderly Peter to pay youngPaul.
The real divide that matters in society is not between young and old, but class, between who has wealth and power and who does not.
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