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

Make sure your pension savings don't breach the lifetime allowance
Pensions

Make sure your pension savings don't breach the lifetime allowance

Don’t forget the lifetime allowance when reviewing your pension planning – breaching it could prove very costly, says David Prosser.
7 Jan 2022
How to track down your lost pension savings
Pensions

How to track down your lost pension savings

Some straightforward detective work could reunite you with pension savings from previous jobs that you may have mislaid.
20 Dec 2021
What to do if you still have a mortgage when you retire
Mortgages

What to do if you still have a mortgage when you retire

In the next few decades, many people will be paying back their home loans well into retirement. David Prosser explains their options.
7 Dec 2021
Making sense of the new minimum pension age rules
Pensions

Making sense of the new minimum pension age rules

The rules surrounding the minimum age at which you can start tapping into your retirement savings have been tweaked, but are still confusing. David Pr…
23 Nov 2021

Most Popular

Shareholder capitalism: why we must return power to listed companies’ ultimate owners
Investment strategy

Shareholder capitalism: why we must return power to listed companies’ ultimate owners

Under our system of shareholder capitalism it's not fund managers, it‘s the individual investors – the company's ultimate owners – who should be telli…
24 Jan 2022
Three innovative Asian stocks to buy now
Share tips

Three innovative Asian stocks to buy now

Professional investor Fay Ren of the Cerno Pacific Fund highlights three of her favourite Asian stocks to buy now
24 Jan 2022
Temple Bar’s Ian Lance and Nick Purves: the essence of value investing
Investment strategy

Temple Bar’s Ian Lance and Nick Purves: the essence of value investing

Ian Lance and Nick Purves of the Temple Bar investment trust explain the essence of “value investing” – buying something for less than its intrinsic v…
14 Jan 2022