According to government figures, while many older people will benefit in the coming years, millions now in their teens, 20s and 30s will lose out

Most people now in their teens, 20s and 30s will be worse off as a result of changes to the state pension system, while millions of older people will gain, according to the government’s own figures.

The data will fuel concern that millions of younger people are suffering from the effects of what has been dubbed “intergenerational unfairness”, partly caused by the government targeting money and resources at the older generation.



The Department for Work and Pensions (DWP) issued the data to back up its assertion that the introduction of the new flat-rate state pension in April “will make millions of people better off” – but the figures also provide stark confirmation that younger people will be losers from the changes.



The new state pension will replace what the DWP said was a “mindblowingly complicated” existing system. Those reaching state pension age on or after 6 April 2016 will get the new regular payment, which has been set at £155.65 a week.



In the first 15 years of the new system, around 75% of people who reach state pension age will enjoy a higher state pension than under the current system, said the DWP in a paper looking at the impact of the changes. “This means that by 2030, over 3 million men and over 3 million women will have benefited from a notionally higher state pension,” it added.



Amid a growing row over the way older women have been affected by changes to the state pension age, the DWP said the new regime would provide a financial boost to many women retiring over the next few years.



But several commentators were quick to highlight how many losers there would be from the shake-up.

Tom McPhail, head of retirement policy at pension firm Hargreaves Lansdown, said: “By the time we reach the middle of this century, nearly 70% of those retiring will be worse off than under the present system, seeing a reduction of nearly 10% in their state pension income.”



He cited figures in the DWP paper showing that while more than 80% of those reaching state pension age in 2016 will receive an average of £7 more a week, by 2040 there will be slightly more losers than winners, with the average “loss” put at £11 a week. By 2050 the proportion of people retiring who are set to lose climbs to around 68%, while the average “loss” has increased to £14 a week.



Someone who turned 30 this month will reach their state pension age in January 2054. For someone who turned 24 this month, their state pension age will arrive in January 2060, while someone who turned 18 a few days ago will have to wait until January 2066 before they can claim their state pension.



McPhail said: “The further into the future we go, the more losers there are. The message to those in their 20s today is that you can still look forward to a state pension, but it’ll be less generous than that enjoyed by today’s pensioners.”



Chris Noon, a partner at pensions consultancy Hymans Robertson, said 75% of those reaching state pension age in the next 15 years would apparently be better off, which amounted to about 20% of the entire workforce. He added: “What about the other 80% who will generally be significantly worse off?”



Noon said ministers were continuing to focus on the relatively small numbers of winners. “Far greater numbers across the whole workforce stand to lose out ... Surely it’s more important to tell those who are set to lose out that they will, so that they can make up the shortfall – and have time to do so.”



The DWP paper emerged a day after MPs on the Commons work and pensions committee launched a major inquiry into intergenerational fairness – the question of whether the current generation of people in or approaching retirement will, over the course of their lifetimes, have enjoyed and accumulated much more housing and financial wealth, public service usage and welfare and pension entitlements than younger people can hope to receive.

