Regulation  

‘Is state pension fair to the young?’: WPC

‘Is state pension fair to the young?’: WPC

The Work and Pensions Committee is to examine whether the current generation in or approaching retirement have, over the course of their lifetimes, enjoyed and accumulated more housing and financial wealth, public service usage, and welfare and pension entitlements than younger generations could hope for.

MPs will also examine whether any disparity is a consequence of government policies, such as the ‘triple lock’ which protects pensioners’ incomes, and/or broader economic and demographic trends.

Labour MP Frank Field, chairman of the committee, said: “Is it fair and affordable to divert a large and growing sum of public expenditure toward pensioners – regardless of their circumstances – while mainly poor families with children face year-on-year restrictions on their incomes?

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“Can the triple lock pension increase pledge be sustainable? Or are these policies necessary to guard against pensioner poverty?

“The select committee hopes to learn from voters of all ages what they believe to be both fair and affordable, so we can propose ways of restoring confidence in the welfare state across all generations.”

The inquiry will consider steps which could be taken to address any intergenerational unfairness.

Roger Tull, a financial adviser at Positive Solutions, said: “Older people are much more likely to vote than younger people, so this skews things.

“MPs should look at quantitative easing, as this inflates property prices which are exacerbated by the housing shortage so it’s hardly surprising that the older generation are accumulating wealth.

“The committee should look at the broader span of policy and what it is going to do about the triple lock and the housing shortage. Giving people the additional means to buy is useless if there is no supply, as you are not solving the problem.”

Figures quoted by the committee showed that the group born in the middle of the baby boom have been forecast to receive from the welfare state 118 per cent of what they have contributed, while younger people will have less wealth at each point in their lives than earlier generations had at the same age.

The deadline for written submissions to the inquiry is 19 February.

Adviser view

Carlton Hood, customer director at Old Mutual Wealth, said: “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, and it is important that individuals take responsibility for their own finances and create prosperous lives for themselves and their families.”