POLITICS

Pension Rise To Be Kept Despite Retirees Being Better Off Than Working Households, Confirms Theresa May

Typical pensioner households are now £20 a week better off than typical working age households

13/02/2017 15:49 | Updated 13 February 2017
RapidEye

Theresa May today ruled out any changes to the “triple lock” for pensioners, which sees income rise by at least 2.5 per cent every year for the oldest in society.

The Prime Minister’s Official Spokesman said May was committed to the policy, despite a report today claiming a typical pensioner is now £20 a week better off than working households.

The study from the Resolution Foundation also warns that today’s workers will not enjoy the same standard of living in retirement as current pensioners, with the drop in home ownership depriving many of a nest egg fund.

The “triple lock” on pensions, introduced in 2010, guarantees that pensions rise by the same as average earnings, the consumer price index, or 2.5%.

A report from the Work and Pensions Committee at the end of last year called for the triple lock to be axed in 2020, and Chancellor Philip Hammond has ordered a review into the policy.

When asked if the triple lock could be reformed in next month’s Budget, the Prime Minister’s Official Spokesman said: “It is a manifesto commitment, it will be kept.”

Today’s Resolution Foundation report claims that typical pensioner households are now £20 a week better off than typical working age households, compared to being £70 worse off in 2001.

The reason for this shift is weak income growth for workers together with a new generation of better-off pensioners who own their own homes, have sizeable private pension pots and, in one in five cases, are still employed.

However, those who retired in 2001 have not seen such boom, with their incomes only going up by seven per cent by the year 2014.

Resolution Foundation
Millennials are the first generation to be worse off than its predecessor

Adam Corlett, Economic Analyst at the Resolution Foundation, said it is wrong to assume that “all pensioners are enjoying some kind of boom”.

He added: “Instead, the main driver of pensioner income growth has been the arrival of successive new waves of pensioners, who are more likely to work, own their home and have generous private pension wealth than any previous generation.

“Of course, not all pensioners can draw on these income sources, which is why the state pension will always be the main income for many pensioners.

“We can’t assume either that young people today will be able to drawn upon the kind of wealth that recent pensioners have accumulated, given the recent fall in home ownership and decline in generous defined benefit schemes.”

Speaking on BBC Radio 4 this morning, former Tory Minister David Willetts - head of the Resolution Foundation - called for the triple lock to be scrapped.

“[It’s] a very powerful ratchet pushing up pensions at a time when incomes of the less affluent half of working households are barely rising at all.”

He added: “I actually think pensioners worry about their kids and grandchildren. They don’t want to live in a society where all the big increases in incomes are accruing to pensioners and other groups are being left behind.”

In November, Parliament’s Work and Pensions Committee described the triple lock as “unfair and unsustainable”, and its chairman, Labour MP Frank Field, said: “Millennials face being the first generation to be poorer than their forebears.

“No party has been immune from chasing the pensioner vote –but at what cost to future generations? Politicians of all stripes must accept some responsibility for these trends, and we must act together now to address them.”

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