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| Often hard to remember in the long welfare chill, but there is one resounding success of the last decade of policy. Fewer pensioners are living in relative poverty than ever before. The impact of the triple lock, introduced in 2012, guaranteeing that the state pension will go up every year by at least 2.5% – more if earnings or the inflation rate exceed that – has been dramatic. Pensioner poverty isn’t quite over: after housing costs, one in seven pensioners still live in relative poverty. That is too many, but compare it with the proportions among other groups. A fifth of working-age adults, and 29% of children – in some regions almost a half – live in households with earnings below 60% of the median. At the weekend, MPs on the work and pensions committee swelled a chorus that includes a former pensions minister and the Institute for Fiscal Studies, and demanded an end to the triple lock. | Often hard to remember in the long welfare chill, but there is one resounding success of the last decade of policy. Fewer pensioners are living in relative poverty than ever before. The impact of the triple lock, introduced in 2012, guaranteeing that the state pension will go up every year by at least 2.5% – more if earnings or the inflation rate exceed that – has been dramatic. Pensioner poverty isn’t quite over: after housing costs, one in seven pensioners still live in relative poverty. That is too many, but compare it with the proportions among other groups. A fifth of working-age adults, and 29% of children – in some regions almost a half – live in households with earnings below 60% of the median. At the weekend, MPs on the work and pensions committee swelled a chorus that includes a former pensions minister and the Institute for Fiscal Studies, and demanded an end to the triple lock. |
| Not all pensioners have done equally well out of this golden oldie era, but many have gained. Some pensioners are staying in work longer, enjoying what for most younger workers is the vanished luxury of a defined benefit pension, while their home soars in value. They even enjoy universal pensioner benefits like the winter fuel allowance and the Christmas bonus. Yet the generation of millennials, those born between 1980 and 2000, are struggling on stagnant wages, enrolled in pension schemes to which their employers contribute only 1-2% (rather than the 16% or more they contribute to defined benefit schemes), and unlikely to be able to afford to buy their own home for years to come. According to the MPs, they will be the first generation to put more into the welfare state than they take out of it. | Not all pensioners have done equally well out of this golden oldie era, but many have gained. Some pensioners are staying in work longer, enjoying what for most younger workers is the vanished luxury of a defined benefit pension, while their home soars in value. They even enjoy universal pensioner benefits like the winter fuel allowance and the Christmas bonus. Yet the generation of millennials, those born between 1980 and 2000, are struggling on stagnant wages, enrolled in pension schemes to which their employers contribute only 1-2% (rather than the 16% or more they contribute to defined benefit schemes), and unlikely to be able to afford to buy their own home for years to come. According to the MPs, they will be the first generation to put more into the welfare state than they take out of it. |
| It is not granny bashing to suggest that this is bad policy. The welfare system is built on the notion of what the MPs describe as an intergenerational contract, one that depends on paying in when you can and taking out when you need to. But people working now will be working longer than their parents, and generous pensions benefits unavoidably discriminate in favour of those who live longer, the very people who will mostly have done well out of life from birth. | It is not granny bashing to suggest that this is bad policy. The welfare system is built on the notion of what the MPs describe as an intergenerational contract, one that depends on paying in when you can and taking out when you need to. But people working now will be working longer than their parents, and generous pensions benefits unavoidably discriminate in favour of those who live longer, the very people who will mostly have done well out of life from birth. |
| In a generation’s time, the cost of the state pension will have risen from 5% to 7% of the national income. While it is impossible to assess the future cost of a benefit that depends on inflation and earnings growth, the triple lock could be contributing 1% of that. In the four years since it was introduced, it is estimated to have cost £18bn. At the same time, £22bn has been taken out of working-age welfare and there is now a freeze until the end of the parliament. No wonder the government is accused of favouring the old, who vote and tend to vote right against the young who, if they vote at all, vote left. | In a generation’s time, the cost of the state pension will have risen from 5% to 7% of the national income. While it is impossible to assess the future cost of a benefit that depends on inflation and earnings growth, the triple lock could be contributing 1% of that. In the four years since it was introduced, it is estimated to have cost £18bn. At the same time, £22bn has been taken out of working-age welfare and there is now a freeze until the end of the parliament. No wonder the government is accused of favouring the old, who vote and tend to vote right against the young who, if they vote at all, vote left. |
| This week the benefit cap starts to bite. Together with the cuts in the work allowance element of the universal credit, and the freeze, the Resolution Foundation reckons families with children could lose up to £1,300. It may be up to twice as much for those with a large family. Pensioners living secure in the knowledge they can pay their bills is good. For just managing families, the prime minister’s avowed concern, to live in fear of the food bank is not. If the overall spend must be limited, then in the autumn statement later this month the chancellor has a chance to rebalance how it’s distributed. For the sake of fairness, families must now come first. | This week the benefit cap starts to bite. Together with the cuts in the work allowance element of the universal credit, and the freeze, the Resolution Foundation reckons families with children could lose up to £1,300. It may be up to twice as much for those with a large family. Pensioners living secure in the knowledge they can pay their bills is good. For just managing families, the prime minister’s avowed concern, to live in fear of the food bank is not. If the overall spend must be limited, then in the autumn statement later this month the chancellor has a chance to rebalance how it’s distributed. For the sake of fairness, families must now come first. |