As many as one in four people would lose their state pension under new recommendations by an influential think tank.
The centre-right Adam Smith institute (ASI) says retirees with assets worth more than £1 million should no longer be entitled to the benefit. Analysis from earlier this year by the Intergenerational Foundation claimed that one in four pensioners were millionaires if the value of their property and pensions were taken into account.
The ASI argues that these people do not need to access a state pension and the money saved from offering them one can be used to help younger generations who find themselves much less well off. The report sets out a number of major reforms it says would reduce inequality between the generations.
Among them, according to Leicestershire Live, is a call to axe the triple-lock protection on state pensions, which the report describes as "unfit for purpose". The triple-lock was introduced in 2010 to ensure the state pension would not lose value in real terms. It guarantees that each year it would increase by the greatest of the following three measures: average earnings; prices measured by the Consumer Prices Index; and 2.5 per cent.
But the report argues it should now be scrapped because it is making wealthy pensioners more wealthy while workers have seen their incomes fall in real terms. Quoting data from the Joseph Rowntree Foundation, the ASI said the triple-lock mechanism had seen the average pensioner's net income increase by £510 a year since 2010.
Meanwhile, working households with a child are down £375 a year in the same period. Now, more than one in five of the UK population, 22 percent, live in poverty – 14.5 million people.
According to the institute's calculations, the Government could save the taxpayer £25billion a year if those 'worth' over £1million were denied the State Pension. An alternative measure was to means-test pensions for higher rate taxpayers.
Under the current triple-lock system, the State Pension is raised each April. In 2023, the increase will be 10.1 per cent in line with inflation, which the ASI says is unfair.
"The triple lock is unfit for purpose," the ASI report authors said. "This ratchet spending is becoming unsustainable and unjustifiable, and exposes the Government to large state pension payouts which outstrip the growth of the economy that underwrites them."
"An increasingly large divide has opened up in British society between generations in which the young lose out, while the elderly benefit." The report added: "The state pension is effectively a universal benefit, funded out of general taxation and applied to almost all pensioners. Most other benefits are targeted towards those who need it the most and adjusted as those needs fluctuate."
Amongst the pension policy recommendations, it also encouraged the Government to abolish Stamp Duty, offer school leavers personal development loans and unfreeze income tax thresholds.
- What do you think of this idea? Should pensioners with assets worth a million or more lose their state pension so the younger generation can have a helping hand? Let us know your thoughts in our comments section
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