Britain is a nation of pensioners (around a quarter of the population) and aspirational pensioners (everybody else). Old age is not something the young tend to want to contemplate but it will descend on most of us, and is natural for all of us to want our final chapters to be comfortable and secure. This inescapable fact should remain central to any debate about Britain’s pension entitlements.
It’s now predicted that the state pension might next year be raised by a massive 8% – thanks to the so-called triple lock. This has produced a lot of talk about intergenerational fairness.
Generational tensions can be overstated: after all, grandchildren tend to love their grandparents and vice versa. Yet it is easy to understand the resentment of younger Britons when learning about this apparently generous pension increase. After the financial crash, the 50% of young people who attend university were whacked with a tuition-fee increase that racked up their student debt to an average of £45,000; youth services faced virtual disintegration after 70% cuts; and home-ownership among the young has collapsed, to be replaced by the insecurity of the private rented sector. Over the past decade, workers in their 20s and 30s have had the worst pay squeeze, and they’ve been hammered by cuts to social security entitlements ranging from housing benefit to tax credits and the looming cut to universal credit. Throw in the sacrifices they’ve made during the pandemic – mainly to protect older citizens, and frustration is understandable.
Pensioners, after all, receive winter fuel payments and free bus travel, and more than three-quarters own their homes outright. Many have benefited from the surging house prices that have locked the young out of the property market. So why should they be given such generous pension increases – which are set at the rise in prices, the rise in earnings, or 2.5%, whichever is the highest (and this year earnings are likely to rise by 8%).
From general elections to the referendum, many young people believe their seniors have taken voting decisions that have harmed their interests and attacked their social values. Brexit itself has damaged job prospects and life opportunities.
Yet generalisations about entire generations are misguided. It is true that pensioner poverty rates have fallen steeply since they exploded under Margaret Thatcher, who scrapped the link between pensions and earnings back in 1980. Nonetheless, there remain 1.9 million pensioners condemned to poverty.
Kate Ren, 27, is a social worker in Salford who sees this brutal and little-discussed reality up close: ranging from heroin addicts in their 80s to older people who lack families and have been left isolated. “Many don’t have computers, let alone wifi, and spend ages on the phone trying to access benefits,” she tells me. Part of her job is to devise care plans for the old that many simply cannot afford: one woman suffered a stroke and was left in perpetual fear of bailiffs coming round because of the care costs she had accrued. These are terrible realities that await some of today’s working-age population.
Indeed, our state pension remains almost the lowest in the developed world. According to the Trade Union Congress, if Britain scrapped the triple lock in favour of an earnings link, £700 a year would be cut by 2050, driving 700,000 pensioners into poverty. The reason the triple lock benefits the young the most is that every year it accrues more in value: so in 20 years’ time, for example, it will be worth far more to someone in their 40s today. With so many younger people not saving for private pensions until middle age – worsened by the current national emergency – they will come to depend on the state pension all the more. Given private pensions impose thousands of pounds worth of costs on individuals over their lifetime, is it not better to rely on progressive taxation to fund a generous state entitlement instead?
We are told that our pensions system is so unaffordable that by the time today’s young enter retirement it will have collapsed anyway. But this is surely a nonsense: any political party would face severe electoral consequences if it turned on pensioners, and the UK spends significantly below the OECD average as a proportion of its economy, and is beaten by countries including Colombia, Slovakia and Hungary. Far from undermining the state pension and portraying it as an indulgence for baby boomers, the argument should surely be that it is completely insufficient: an 8% rise is not enough.
Those wishing to scrap the triple lock would condemn the young to the worst of all worlds: insecurity not only in their youth, but in their final years too. Youth services and social entitlements should not be paid by driving pensioners into poverty: robbing grey-haired Peter to pay fresh-faced Paul. Instead, taxation that is more justly levied on income and wealth should pay for social programmes for young and old alike. As it happens, that will mean asking older Britons to pay significantly more – after all, one in five baby boomers are millionaires – but without condemning those pensioners who are struggling.
As ever, the real divide that matters in society is not between young and old, but rather between who has wealth and power and who does not. Anything that distracts from that basic truth will entrench inequalities – and fail to make the lives of younger people any happier or more secure.
Owen Jones is a Guardian columnist