Have baby-boomers had it too good, for too long?
An inquiry into ‘intergenerational fairness’ has been launched by the Work and Pensions Committee to establish whether the generation of people in or approaching retirement is getting a better deal than younger generations.
The committee wants to find out whether older people have, over their lifetimes, built up more wealth, enjoyed better welfare and pension benefits and had greater public service usage than younger generations can ever hope to expect.
According to the cross-party group of MPs, people born between 1951 and 1961 – the middle of the so-called baby-boomer generation – are expected to receive 118% of what they have contributed to the welfare state. However, younger generations are anticipated to have less wealth at each stage in their lives than the generations that came before them.
Furthermore, ONS data shows that since the financial crisis in 2008, the average retired household income has increased by £1,800 a year while working households have seen their incomes fall by £800.
The inquiry will investigate whether disparities in intergenerational wealth are the result of government policy – for example the triple lock, which safeguards pensioner incomes, or the result of broader economic and demographic trends. It will also assess whether action can be taken to tackle any unfairness.
Announcing the launch, Rt Hon Frank Field, MP and Chair of the Committee said: “Voters have two priorities for welfare reform: ‘is it fair’ and ‘is it affordable’. Politicians of successive governments have ducked both of these fundamental questions when it comes to the different levels of income afforded to those above and those below retirement age. Is it fair and affordable to divert a large and growing sum of public expenditure towards pensioners – regardless of their circumstances – while poor families with children face year on year restrictions on their income?”
Carlton Hood, customer director at Old Mutual Wealth said that while this is a vital issue for the government to address, it will not be an easy one to tackle. “In 2035 the first generation of consumers will retire that are less well off than their predecessors. It is easy to see why younger people, particularly those struggling to get on the housing ladder, will feel they have been dealt a poor hand. While it is a worthy debate, politicians have only limited power to address these issues. We are entering an era of personal responsibility with less reliance on State support,” he said.