More of us are growing old, but pensioners don't have to be an economic burden

Telegraph

a day ago

As the country paid its respects to the last surviving veterans of the Second World War, you might have assumed that Britain venerates its pensioners. But the increase in life expectancy since that war means that the pensioners are a much bigger share of the population than in 1945 and there is now a danger that rather than valuing and celebrating seniority, younger generations are being encouraged to see the elderly as a liability and a drain on the public purse.
The pension commission, launched recently by the Labour government, announced this week that within the next 50 years pensioners will make up a quarter of the adult population. This alarming headline has triggered speculation that the ground is being prepared for an increase in pension age or the discarding of the triple lock.
The Government is keen to damp down speculation of any changes to the current system, fearing the electoral impact, not to mention the wrath of its own backbenchers, following the embarrassing retreat on the winter fuel allowance.
But the changing balance of the population needs to be addressed, so that growing old is viewed as an opportunity rather than as a slide into dependency. The reality is that older people are enjoying much better health than their parents' generation and many are continuing to work beyond retirement age. Today's grandparents are also more likely to be providing childcare – or helping their adult children onto the housing ladder – than putting their feet up.
George Osborne's highly political decision to introduce the triple lock, during the coalition government, may have looked like an easy win at the time, but by creating a massive financial liability has ended up by stoking intergenerational resentment. The state pension is now the second biggest item of government expenditure after health; by 2030 it is expected to cost around £15bn a year. Had the state pension simply kept pace with the cost of living, the cost would have been around a third lower.
An inflation-protected pension should surely now be the way forward, breaking the link with earnings but providing a safety net to underlie private savings. A government with the courage to propose this would be in a much stronger position to offer incentives to savers and promote greater financial independence in old age. Coupled with this should be serious reform to the social care sector, to lift the burden on the NHS and assuage the misery of too many older pensioners languishing in hospital. Again, incentives need to be put in place to encourage self-insurance, with a cap on care costs to enable a thriving social insurance sector and more private care providers.
The danger with the present Labour government is that it is ducking both these challenges and compounding the problematic legacy of previous administrations. It has postponed any decision on the reform of social care, despite the inevitable impact on the NHS budget in the meantime. As to pension saving, the Chancellor is actively reducing or removing pension tax reliefs as well as undermining private pensions providers by interfering in their investment decisions. Damaging private saving simply pushes the problem back on to the Government's books. This country has drifted into a mindset of state dependency and none of our politicians have the courage or foresight to break free.