Rebalancing between generations needed to ease burden of spending pledges for older people in Britain, says thinktank

Older people have saddled the younger generation with an excessive bill for state pensions while grabbing an ever-greater share of NHS spending, according to a report that calls for intergenerational rebalancing.

The report from the Intergenerational Foundation (IF) said spending promises on state and public sector pensions are “overwhelming young people’s prospects”.

The thinktank is calling on the prime minister, Theresa May, to abandon triple lock protection, which promises that the state pension will rise each year by whatever is highest out of inflation measured by the consumer price index, average earnings growth or 2.5%.

The former pensions minister Ros Altmann has called for the triple lock to be scrapped. The Department for Work and Pensions has declined to rule out a review of the “totemic” policy in the coming months.

The report estimates that workers are paying £2,846 a year each to cover the cost of paying state pensions. Public sector pension liabilities, for schemes such as retired civil servants, have risen by 12% to nearly £44,000 per worker, with total liabilities at £1.4tn, it added.

Angus Hanton, the co-founder of IF, said: “Public sector pensions represent one of the largest unfunded burdens for younger taxpayers, who will not retire at the same age, or on the same terms, while having to contribute more to their own pensions.

“Increasing retirement ages and moving to career average pensions will not be enough to stall the pension burden avalanche that is bearing down on the young. Auto-enrolment is an apparent success, except that it leaves young people paying twice, saving for their own pensions while also paying for the pensions of older generations through taxation.”

But charity Age UK said the vast majority of pensioners have contributed throughout their life to the state pension, which remains lower than the amount paid in many other western countries.

Caroline Abrahams, the charity director at Age UK, pointed out that 1.6 million older people live in poverty in the UK. “A strong pensions system that provides a decent quality of life in retirement is central to a civilised society and in the best interests of us all,” she said.

“‎In fact, you could say it is all the more important for young people to know they have a reasonable state pension to look forward to, given the uncertainty they face over jobs and housing, and given that the value of future private pensions will largely depend on investment growth, which is not guaranteed.”

IF, which compiles an annual index that attempts to measure the balance, or lack thereof, between generations, said younger people have lost out significantly since the the millennium, not just on pensions, but also on health and housing.



Writing in the Sunday Times, Andy Haldane, the chief economist at the Bank of England, highlighted an intergenerational “faultine” in the UK economy.

“Since 2007, the real disposal income of pensioners has risen by almost 10%. Those over the age of 65 have harvested fully two-thirds of that £2.7tn increase in national wealth. By contrast, since 2007, working-age households with children have achieved income gains of only about 3%, while the incomes of those without children have fallen by 3%,” he said.

The IF index charts a widening disparity on healthcare spending, mirroring Britain’s ageing population. In 2000, the NHS carried out 0.8 treatments on the over 60s, compared with one treatment for those aged between 14 and 59. This has risen to 1.2 treatments for the over 60s, an increase of 50%.

“This provides a snapshot of the extent to which older people are disproportionately using NHS hospital services, compared to younger ones,” the report said.