CPS proposes organisation to limit generational burden

CPS proposes organisation to limit generational burden

An official body should scrutinise the effect of tax decisions on current and future taxpayers and stop one generation being burdened by another, Centre for Policy Studies research fellow Michael Johnson has argued.

In a four-page CPS briefing note, The Case for an Office for Inter-Generational Responsibility, Mr Johnson accused politicians of “fawning” to pensioners with promises such as the state pension triple lock, and increasing burdens on younger voters.

He described Generation Y, broadly defined as those born from 1980 to 2000, as “a generation already faced with unaffordable housing, college debts, fragmented careers, earnings stagnation, relatively thin occupational pension provision and a rapidly retreating state pension”.

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Mr Johnson said an office for inter-generational responsibility (OIR) should coordinate the production of inter-generational impact assessments, scrutinising all tax reliefs and exemptions.

He added: “An OIR should exude an ethos of fiduciary duty towards current and future taxpayers.”

GroupOwn estimate of average yearly retirement income
Those planning to retire this year£17,000
People currently aged between 45 and 55£14,000

Source: Prudential

His argument came as research by Prudential found that people aged between 45 and 55 expected to work until they were 65 and estimated an average yearly retirement income of £14,000.

In contrast, other research by Prudential found that people planning to retire this year expected an average of £17,000 a year in retirement income.

Vince Smith-Hughes, head of business development for pensions at Prudential, said: “This year’s pensioners have the highest-expected retirement incomes of any group since the financial crisis, so it is surprising to see reduced confidence among the next generation of pensioners.

“For most people, starting pension contributions early and continuing these throughout their working life is the best way to achieve a comfortable standard of living in retirement.”

Industry view

Mark Stopard, head of product development for Partnership Assurance Group, said: “As a nation, we certainly need to ensure that we are not robbing Peter to pay Paul when it comes to inter-generational finances.

“We do need to remember that while some baby-boomers are enjoying a comfortable retirement, others are not.”