Invest in youth, or pensions? — that is the question…
Recently in the UK, along with many other advanced economies, political parties have begun to turn to pensioners for votes. Yet again, the story is one of wasteful universal systems feeding the popularity politics machine, with the ‘triple-lock’ pension guarantee locking up huge sums of public money and the winter fuel allowance burning through capital. (Not even remotely sorry.) To finally get to the point, governments are now giving away money to many pensioners who already have more than enough, while they neglect the youth. The somewhat immoral logic behind this is that the youth can’t vote, so instead of investing in the most important age group in any country, politicians currently choose to attack the ever-dwindling school budgets.
Many pensioners do need financial aid beyond that of the state pension, and the allowances they receive are of great help to them. For example, pension credit and council tax breaks allow more and more people to live properly in their retirement. The reason why these benefits work is because, as all good welfare payments are, they are means-tested. Therefore, in order to receive this money, one must prove one’s inability to live on their current income, or the hardship they endure due to their poverty. This is a relatively simple concept, but it is far too often disregarded in order to boost opinion polls and garner more seats in Parliament.
However, most people run into extra money after they have begun to receive a state pension, through the virtue of private schemes. While people should be supported until they get this extra income, after they begin claiming a private pension, these benefits, unless still absolutely necessary, really ought to be withdrawn. If the benefits system was more efficient and less wasteful, then, not only could more money be directed towards the other end of the age spectrum, but there could also be greater sums for pensioners living in poverty. Around 1/6 of the population are 65+ years of age, and 1/6 of this group live in poverty. Using the same measure of poverty (different measures vary wildly), the figure for total UK poverty is roughly 1 in 10, so pensioners are disproportionately affected.
The aforementioned winter fuel allowance is perhaps the worst governmental benefit to pensioners. Every year, the government pays out £5b in benefits to the elderly, with the winter fuel allowance accounting for half of that sum. As this is paid to every person in receipt of a state pension, this means that every year, around £2b is paid out to people who simply don’t need it. If this benefit was means-tested (which obviously would come with the cost of policing and testing, so the some of the £2b would be spent on this), then the payments to those in poverty could be maintained and at the least tripled, allowing more comfortable living for those who are in desperate need of extra income.
The triple-lock protection on benefits shows the political bias towards wealthy pensioners best of all. The system is designed to ensure a good increase in the pension being paid out, but goes a little overboard in doing so. It builds on the far saner and more efficient double-lock system, which guarantees either a rise in line with that of inflation or according to average salary growth, whichever is the largest for the previous year. However, the triple-lock goes one further and throws a random figure (2.5%) into the mix for no good reason whatsoever. When this increase is used, the government loses out on billions that could be invested in securing NHS stability during the winter. Either that must change, or we perhaps should start charging over 65s for usage of free services at peak times.
This shows the real bias of the political class towards the elderly: while most budgets grow less than inflation or, indeed, stagnate altogether, the pension budget often rises more than is necessary. In times of good economic output and GDP growth, a country can afford such increases in public expenditure. However, in times of austerity and decline, governments must make changes to broken, leaking systems and save as much money as possible for the core services such as healthcare and education. Once more, the new age of populist politics has failed the people it purports to serve, and the politicians must now answer for the failings of government over the last 20 or so years.
