The House of Lords committee on intergenerational fairness has delivered a series of recommendations, calling for policies to support younger people in the employment and housing markets.
This report also called for better in-work training and education, to help younger generations prepare and finance a 100-year lifespan.
One recommendation to boost pension provision for the young is to have their default employment status as ‘worker’. This would see them automatically enrolled into a company pension. Many of those working in the gig economy or on short term contract do not benefit from this at present.
Chair of the committee Lord True says that intergenerational bonds “remained strong”, however he warned there is a risk that these could be weakened “if the government does not get a grip on key issues such as access to housing, secure employment, and fairness in tax and benefits”.
Pensions remain a key issues in this intergenerational divide. This report recommends removing the triple lock for the state pension, and uprating this benefit in line with earnings instead.
It also recommends introducing means-testing, so better-off workers over the state pension age pay national insurance contributions while they continue to work.
Commenting on this report Aegon’s pensions director Steven Cameron says that continuing the triple lock on pensions looks to be “financially unsustainable”.
The average income of a pensioner couple is now £454 a week which means that incomes are now around 70 per cent of non-retired households.
“This represents a huge change over recent decades and the stereotype of retirement as a time of constant thrift is largely outdated. Pensioner incomes have steadily risen as a result of factors like the provision of defined benefit pensions, increases in the state pension and strong performance of property prices and investments.”
He adds: “Some of the factors that have boosted pensioner incomes in recent years, like defined benefit pension provision, will not last forever as employers increasingly switch to less generous alternatives and any change could have significant consequences in the years to come.”
Cameron adds that focusing on younger people’s employment status is important. “For younger people, considering their default employment status as ‘worker’ is a helpful protection and should come with employee benefits such as auto enrolment into a pension.
“As the age profile and distribution of wealth of our population continues to change, it’s critical that all government policies are considered through a lens of intergenerational fairness.”