Paying pensions to older workers is not to blame for younger workers getting a bad deal, according to a new report from trade union the TUC.
The briefing paper on intergenerational inequality claims that there is not enough evidence to suggest that the payment of older peoples’ pensions is reducing the wages and pension provision for younger colleagues.
Instead it says that changes in the labour market have created a situation of falling pay, decreasing job security and poor pension benefits.
Previous research by Fidelity in 2016 found that millennials face twice the inflation rate versus pensioners. Plus research from the Institute for Fiscal Studies last year found lower home-ownership rates and less generous pensions have left those born in the early 1980s with half the wealth that those born a decade earlier had at the same age.
Following the financial crisis, the TUC says younger workers have suffered the greatest fall in wages with those aged between 22 and 30 suffering a typical 16% loss, compared to an average of 10% across all workers. It also says that younger workers are more likely to be doing seasonal work, working for an agency or employed on zero-hour contracts.
“All generations deserve fair pay”
The TUC says that pitting different generations against each other will be both unhelpful and divisive. It proposes that instead of focusing pension support on one generation over another, the priority must now be on improving the pension provision for all.
TUC assistant general secretary Paul Nowak says: “Many young workers are unable to save for a pension because they’re stuck in low-paid, insecure work. But we are not going to fix this problem by pitting them against older people. Let’s not forget that 1.5 million pensioners live in poverty – and most of them are women.”
He adds: “All generations deserve fair pay during their working lives and a decent standard of living in retirement. We must focus on the wider causes of inequality to improve pensions across the board.”
It can seem as if baby boomers have it all, while millennials are struggling. But discuss these issues, and you may find that your nearest and dearest are happy to offer financial help to both children and grandchildren.