Disposable income amongst retired households has risen by 3.8 per cent since 2009/10, new figures from the Office for National Statistics revealed yesterday, 10 January 2017.
In contrast, however, the ONS report also showed that the Gini coefficient for disposable income amongst non-retired households fell slightly by 1.9 per cent in the same period. In 2015-16, this group’s income was almost unaltered rising by £55 as opposed to pensioner incomes that saw a £656 uplift.
While this is definitely a success for the country’s retired population, we are also led to consider those who are being hugely disadvantaged to the benefit of the older population.
The gradually escalating position of the retired generation could, then, be viewed as a direct result of the pensions triple lock, while the non-retired, specifically the working generation, are ultimately left to bear the brunt of the government’s pension policy.
Although uprating the state pension by the highest price of earnings growth or inflation (two of the three triple lock components) is largely accepted, it is the third, an increase of 2.5 per cent that has proven problematic and essentially led to a generational financial divide.
Following the EU referendum last year, the retiring population, many of whom were counted as Brexit voters, have also been criticised for their lack of consideration of the economic impact Brexit would have on the economy.
Nonetheless, it is anticipated that this may not be a continued outcome for long as suggestions have been made that the triple lock’s years are numbered, with hints that the next parliament in 2020 may mark the policy as no longer affordable.
Barnett Waddingham senior consultant Malcolm McLean commented last year: “The government has confirmed that the triple-lock for state pension increases will continue for the duration of the current parliament but has recently signalled that it may not be possible because of rising costs to maintain it beyond 2020. It is not yet clear how this is all going to be resolved, but over the next few years some big political decisions will need to be taken on both state pension ages and the future of the triple-lock.”
While it is likely that the next few years will see a continued trend of richer pensioners, it is hoped that the next parliament will take action to bridge the generational divide.