“The Resolution Foundation’s findings that pensioner households are now better off than working households is in the main due to ever-richer households reaching retirement, namely the asset-rich baby boomer generation.
“The report further substantiates feelings of intergenerational unfairness that have become an increasingly tense point. The reasons are complex, but things that may have been taken as fairly straightforward by previous generations: owning your own home and building up a funded pension, are now much more challenging for younger generations today.
“Old Mutual Wealth’s research* shows that 22% of those aged 30 to 45 in the UK have less than £100 in savings outside of their pensions. With rising cost of living and low income growth, lack of disposable income appears to be the key barrier for those not currently saving. Just under 80% of those not saving said it was because they couldn’t afford to.
“The Resolution Foundation points out that retired households have benefited disproportionally from growth in public benefits. At the moment we operate a ‘pay as you go’ system for state pensions, meaning the national insurance paid today is for the current generation of retirees. While the system has its merits, society has changed and it’s generating a problem. As society gets greyer, working age tax payers face a growing bill to cover the state pension.
“The report gives government further cause for thought to pursue a policy agenda focused on rebalancing the intergenerational contract. The most obvious target is the state pension triple lock which was introduced to remove pension poverty and it has been successful in that endeavour. Now that the relative decline in the State Pension has reversed, the triple-lock should be reviewed from 2020 and replaced with an earnings link.
“The government should also consider future policy on universal pensioner benefits. Targeting these benefits more efficiently to those that most need help could allow policymakers to help younger generations.”
“However, the Resolution Foundation also pointed out that part of this increase in income is thanks to people working longer. They found that almost one in five pensioner families now live in a working household, compared to one in eight at the beginning of the 2000’s. This supports research from Old Mutual Wealth conducted with YouGov, which showed that people are increasingly using temporary and flexible work as a way to fund their retirement. The survey showed that 30% of those surveyed expect a job to help fund their future retirement income.
"Longer working lives should be encouraged and become part of a long-term sustainable plan by the government to help people fund their retirement.”
*YouGov survey of 3,000 UK adults, 2016.