Calls for the government to scrap the triple lock have intensified after a report found that pensioner households are £20 better off per week than working-age households.
The As Time Goes By report, by the Resolution Foundation think-tank, highlighted various intergenerational inequalities, including the fact that the trend of each generation earning a higher income than their predecessors has stopped.
According to the report, milennials (comprised of people born between 1981-2000) fare no better than Generation X (those born between 1966-1980) when it comes to income.
Although the average income of pensioner households does not reflect the prospects of all pensioners, and is boosted by the incomes of asset-rich baby boomers (those born in 1946-1965), the report shows that even “the poorer 60 per cent of pensioner households are richer than the poorer 60 per cent of non-pensioner households”.
Jon Greer, pensions technical manager at Old Mutual Wealth, pointed to the increase in state pension benefits, primarily in relation to the state pension triple-lock, as another element that is furthering inequalities.
Mr Greer said: “I think it now comes down to how long you keep the triple lock in place.”
Suggesting a review of the triple lock in 2020, he added: “You can look at other mechanisms to enable pensioners to share the proceeds of growth in the economy and protect against inflation. Introducing a smooth earnings link, and making sure that there is a link to inflation [would ensure] that pensioners’ spending power isn’t eroded as well.”
Nathan Long, senior pension analyst at Hargreaves Lansdown, attributed inequalities to the fact that the average retiree has access to defined benefit pension schemes “that provide a core level of income”, making them better off than people who have a money purchase pension scheme at retirement.
Access to housing also plays a significant part in expanding income gaps between generations. With limited supply and climbing prices, younger generations have fewer opportunities to save.
Mr Greer added: “Equity release is going to grow significantly, but there aren’t a huge amount of advisers who are active in the equity release market. There’s a need for the regulator to look at what kind of regulatory regime we can [enforce] to try and help people understand more about housing wealth and how it can boost your retirement.”
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