For those looking forward to the prospect of retiring, news that a think tank has recommended some Brits should lose their state pension will not be welcome. According to a report, as many as one in four people should lose their eligibility for the Government paid benefit.
However, before panic sets in, it should be noted that the centre-right Adam Smith Institute (ASI) said retirees with assets worth more than £1million should no longer be entitled to the benefit. Birmingham Live reported on the analysis, in which it says the Intergenerational Foundation claimed that one in four pensioners were millionaires if the value of their property and pensions were taken into account. Now, the influential think tank has argued these people do not need to access a state pension.
The report said the money saved from offering them a state pension could be used to help younger generations - many of whom find themselves less well off. The ASI sets out a number of major reforms it claimed would reduce inequality between the generations.
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According to the authors of the controversial report: "The triple lock is unfit for purpose". They said. "This ratchet spending is becoming unsustainable and unjustifiable, and exposes the Government to large state pension pay-outs which outstrip the growth of the economy that underwrites them."
They went on: "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."
Under the current triple lock system, the state pension is raised each April. In 2023, the increase will be 10.1% in line with inflation, which the ASI says is unfair.
The report argued the current rules should now be axed because they are making wealthy pensioners more wealthy - while workers see 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.
News of the recommendation hasn't gone down well. Replying to the suggestion, one reader said: "Absolutely cruel to consider this and before anyone asks I'm in my 40s." Another added: "What a terrible idea - pay in all your life and then have no pension just because you bought a house and were careful with your money."
What do you think of the suggestion? Let us know in the comments below.
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