Robbing pensioners to pay millennials

Should we get rid of generous perks for pensioners to fund more support for cash-strapped young people?

Should we get rid of generous perks for pensioners to fund more support for cash-strapped young people? The House of Lords' committee on inter-generational fairness says policies like the triple-lock guarantee on state pensions, free TV licences and bus passes for pensioners, and even the winter fuel allowance may have had their day.

The argument is that as pensioners have seen their incomes rise more quickly than other groups over the past ten years, it now makes sense to prioritise younger generations. Savings could, for example, be ploughed into affordable housing.

So what would pensioners be missing out on? Well, analysis from the House of Commons Library in the run-up to the 2017 General Election, when Theresa May floated the idea of dumping the triple lock, suggested it would cost a pensioner with the full state pension £817 over the next five years.

That assumed pension benefits would simply be increased in line with inflation forecasts at the time, rather than the highest of inflation, earnings growth or 2.5%, as the triple lock promises. In addition, the winter fuel allowance is £200 per year for most pensioner households, while free TV licences are currently worth £154.50 a year.

Of course, the flipside to the these costs is the potential savings for taxpayers. The Institute for Fiscal Studies puts the net gain from abolishing the triple lock at around £4bn a year. Add in another £745m for free TV licences for the over-75s if they were scrapped the BBC currently picks up this cost plus the £2bn-£3bn cost of the winter fuel allowance, and significant sums on bus passes, and the savings begin to look very significant. It may come down to whose votes the government covets more.

Recommended

Suspending your pension contributions? Remember the magic of compounding
Pensions

Suspending your pension contributions? Remember the magic of compounding

Think very carefully before suspending your pension contributions, or you will miss out on compound interest – the “eighth wonder of the world”.
12 Jan 2021
Shop around to secure the best Sipp
Self invested personal pensions

Shop around to secure the best Sipp

If you’re one of the growing number of savers with a self-invested personal pension (Sipp), make it a new year’s resolution to check you’re getting va…
11 Jan 2021
Scammers target pension transfers
Pensions

Scammers target pension transfers

People who apply to transfer their defined-benefit pension to another pension provider need to be on their guard against a proliferation of scammers.
18 Dec 2020
Compensation claims grow after guaranteed minimum pension payouts fall short
Pensions

Compensation claims grow after guaranteed minimum pension payouts fall short

Some defined-benefits pension schemes have paid the wrong amount of “guaranteed minimum pensions”, leading to a growing number of compensation claims.
18 Dec 2020

Most Popular

Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021
Inflation is the easiest way out of this – just don’t expect politicians to admit it
Inflation

Inflation is the easiest way out of this – just don’t expect politicians to admit it

The UK government borrowed £34.1bn in December, a record amount for that month. Britain's debt pile now amounts to 100% of GDP. How are we going to pa…
22 Jan 2021
When will the US stockmarket bubble burst?
US stockmarkets

When will the US stockmarket bubble burst?

With US stocks more expensive than before the Wall Street crash of 1929, there are growing signs of “mania”. But what will push markets over the edge?
22 Jan 2021