New research has challenged the commonplace belief that ‘baby boomers’ receive an unfair level of societal benefits compared to younger generations.
The latest research from the Office for National Statistics, published yesterday (August 21), showed each generation’s income challenges compared to their state benefits and taxes paid.
Although the findings challenged the idea older generations ‘had it better’, experts said property inequality was still rife and property wealth was key to correcting intergenerational inequality.
The ONS research showed younger people from more recent generations tended to receive more benefits than people from older generations at similar ages — in particular, those now aged 20-24 paid less tax than other generations did at that age.
It also found more recent generations had relatively faster income growth in their twenties compared with older generations.
In general, and across the generations, household income increased most during people’s twenties and falls once people reach their mid-50s.
Although in terms of income and taxes younger generations faired better than those before them, other research showed younger generations found it harder to acquire property wealth.
A recent report from the House of Lords committee on intergenerational fairness and provision said 60 per cent of potential first-time buyers would be unable to access property wealth without help.
It urged the Financial Conduct Authority to encourage innovation to help younger people get on the housing ladder.
Research from Lloyds Bank, published earlier this year, showed house prices in cities had outpaced earnings growth by 11 per cent while a recent report from Santander showed the “dream of homeownership at a young age” would be over within the next decade without urgent action from the government.
David Burrowes, chairman of the Equity Release Council, said the ONS figures showed older people were working longer and accessing their pension pots, while cash and equity strapped younger generations were increasingly reliant on older generations’ wealth to access property.
He said: “The growth of the bank of mum and dad shows older generations in the UK have a crucial role in helping younger relatives achieve their financial goals.
“However, in order for older generations to continue supporting the needs of younger family members, a holistic view towards one’s assets should be encouraged.”
He added that household wealth accounted for 40p in every £1 of household wealth among over-65s, noting such wealth could play an “important role” in helping generational inequality.
Kay Ingram, director of public policy at LEBC, said: “With first-time buyers now buying at average age 34 and often paying more in rent than the cost of a mortgage, parental help which frees up housing equity will help to spread home ownership and address intergenerational imbalance brought about by house price inflation.
“Advisers who do not consider this as an option, either due to not being qualified to do so, or lack of understanding of lifetime mortgages should partner with other firms to ensure their clients receive holistic advice.”