Opinion: stripping back pensioner benefits is the fair thing to do

Our current set up is manifestly unfair and it will take courage to actually address it, writes John Fitzsimons.

It’s time to begin removing some of the benefits afforded to older people, and devote the money saved towards providing more help to younger generations.

That’s the conclusion of a new report on intergenerational fairness from a House of Lords select committee.

It outlined a whole host of measures that it believes would make things fairer, which include removing the State Pension triple lock, phasing out free TV licences based on age and restricting both free bus passes and winter fuel payments.

The report noted that many pensioners are now better off than people of working age and that with older people receiving so much state support, that funding could be better used by offering targeted help to younger people.

The report notes that many young people, their parents and grandparents worry about those young people being able to buy a home and get a well-paying job.

It states: “This is not due to older generations deliberately or selfishly profiting at their expense but is instead a result of the failure of successive Governments to plan for the future and prepare for social, economic and technological change.”

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We’ve got the balance wrong

It’s not that long ago that the financial position of our older people was in a precarious state. That’s precisely why the Governments of the time introduced robust assistance, such as the State Pension triple lock.

But let’s be honest, the time for reform of the triple lock has long since passed. It is quite simply no longer affordable.

A report a couple of years ago from the Department for Work and Pensions found that if the triple lock continued, it would end up pushing the State Pension age past the average life expectancy in poorer areas of the UK.

That’s insanity. But the triple lock still hasn’t been adequately dealt with because our politicians are so terrified of upsetting the ‘grey vote’ that they can rely on to actually turn up at the ballot box.

I’ve written before about the difficult conversations that we need to be having about addressing this imbalance, and why this cowardice is causing us to avoid dealing with the ongoing care crisis.

We aren’t unique in that respect – even Finland finds itself unable to act because of political strength of older people.

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The madness of our housing market

The report looks a lot at the housing market, and the way that it currently fails younger generations.

There are plenty of issues here.

Some are well known – we simply aren’t building enough homes that are within the reach of young people.

This is why so many are turning to 40-year mortgage terms, desperately trying to make the monthly repayments affordable, even if this condemns them to an extra decade – and thousands upon thousands in additional interest payments – in order to do so.

But the report also highlights that there are insufficient homes being built which will appeal to older people who want to downsize, but simply can’t because there aren’t enough appropriate properties.

If we have more retirement homes available, then it will be easier for older people to downsize and free up those properties which are more suitable for families.

Essentially by getting the whole housing ladder working more efficiently, it should be easier for younger people to buy.

There’s also the issue of mortgages. The report calls on the Government and the FCA to push lenders to be more innovative in developing what it terms ‘intergenerational mortgages’.

These are basically products which allow parents and grandparents to help their loved ones borrow in order to purchase a home.

We’ve already seen some movement in this area, with things like family offset products, where the parent ‘offsets’ their savings pot against the outstanding mortgage of their child, with the child then only paying interest on the difference.

Clearly though there is a lot more that can be done, with no end in sight for the ‘bank of mum and dad’.

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Protecting the vulnerable

It’s understandable that people get very emotional about this issue, that there is an obvious reluctance to remove any benefits open to older people.

Shifting the goalposts after they have spent a lifetime at work isn’t particularly fair, while there is a level of discomfort to causing any upset to those of an advanced age.

Which is why it’s really important that we get the balance right. Nobody is saying that free TV licences need to go entirely, but more that they should be handed out on the basis of household income.

Similarly, while there are plenty of older people who really don’t need the Government handout that is the Winter Fuel Payment, there are many others who really do and so should be protected.

Making things fairer doesn’t mean leaving old people in cold homes, alone.

The simple truth is that there is only so much money to go around, and right now too much of it is going towards a cohort of the population that could get by quite comfortably without it.

That’s not to downplay pensioner poverty, which is a real concern, but to simply acknowledge that there are lots of pensioners doing very nicely, thank you very much.

That the current set up is unfair is no great secret. But it will take real guts from our politicians to actually do something about it.

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Do you agree or disagree with John? What changes, if any, would you make? Share your thoughts in the comments section below.

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