A report from a think tank has recommended State Pension should be taken away from a group of people.
The benefit is a regular payment people can claim when they have reached State Pension age, which is currently 66. However, a report from the Adam Smith Institute (ASI) has suggested retirees with assets worth more than £1million should be denied the State Pension.
The controversial release was written by John Macdonald, James Sean Dickson and Dr Michael Turner. It also called for sweeping reforms to address generational inequalities which act as a "drag anchor" - as Leicestershire Live reports.
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Quoting data from the Joseph Rowntree Foundation, the ASI report found the triple-lock mechanism should also be scrapped as it made rich pensioners richer while workers have seen their incomes fall in real terms. 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. Analysis earlier in 2022 by the Intergenerational Foundation found that one in four pensioners were millionaires when their property and pensions were included. Under the ASI's proposals, these people would not be offered a State Pension.
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 by inflation, earnings or 2.5 percent, whichever is biggest.
In 2023, the increase will be 10.1 percent in line with inflation, according to the ASI this 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.
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