Will the Government Cut the State Pension?

10 November 2016

contributions increase With a rapidly ageing population and the fact that 78% of people over the age of 65 turnout and vote in General Elections, pensioners have traditionally been left alone whenever talks about benefit cuts are held. Scared of losing the 'grey vote', surely no government would dare to cut the State Pension?

However, the idea has been mooted, not by the government itself but by the Work and Pensions Committee which has a Conservative majority. Whilst for many years pensioners in the UK have been the most impoverished group, these days they have been left relatively unscathed by spending cuts and this has left many of them much better off than younger age groups. Between 2007 and 2014, retired household saw their incomes rise by 10% whereas working age households saw their incomes experience a 4% cut.

The Work and Pensions Committee, argues that pensioner benefits should not be 'sacrosanct', with its report into intergenerational fairness concluding:

'The triple lock should not continue beyond 2020. By then, the value of the new state pension relative to average earnings will be close to the historic high for the headline state pension rate. If maintained, the arbitrary boost the triple lock gives to the state pension relative to both earnings and prices will become ever harder to justify both in fiscal terms and from the perspective of intergenerational fairness. We urge political consensus before the next general election on a new earnings link for the state pension.'

Chair of the Committee, Labour's Frank Field was even more direct and spelt out his own views very clearly:

'At the same time as tightening their belts, they are being asked to support a group that has fared relatively well in recent years. Millennials face being the first generation to be poorer than their forebears,' the MP for Birkenhead said.

Will the government cut the State Pension? Probably not, but it is indicative of the degree of intergenerational financial balance that sees not just the media discussing it, but the Work and Pensions Committee in Parliament.

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      Rupert is Smart Pension's marketing team manager. Working across all marketing verticals to support the business's growing requ…