Flush with cash?

Pensioners earn more than working-age people for the first time ever, newspapers declared earlier this week (February 12). It’s a shocking headline to be sure, but just how true is it?

The story was based on a new report published by the Resolution Foundation, which found that ‘typical’ pensioner households are now £20 a week better off than ‘typical’ working-age households.

It also found that pensioners are now much less likely to be in poverty than the previous generation of pensioners – 40 per cent of those living in relative poverty in 1961 were retired people, down to only 12 per cent now.

But if you’re thinking that all pensioners are now suddenly awash with cash, you’re wrong.

Much of what is driving ostensibly higher pensioner incomes in the report is down to looking at figures from very specific angles.

For example, the Resolution Foundation looked at incomes only after housing costs are factored in. That pensioners – many of whom may have already paid off their mortgages – are being compared to working-age households, who are largely still paying significant housing costs, makes the conclusion that pensioners might be technically better off an obvious one.

And even this may not be a forgone conclusion — it emerged today (February 17) that one in four people planning to retire this year will still have mortgage or other debts to pay off, averaging about ÂŁ24,000 in total.

In its report claiming pensioners are now better off than working people, the Resolution Foundation also defined a ‘pensioner household’ as one that had at least one pensioner in it.

When you consider that a record number of older people are still working and may live in the same household as a person who is retired, the Foundation’s conclusions aren’t that surprising after all.

Poverty

By examining pensioner incomes through such a narrow lens, the lived experience of a large swath of pensioners, many of whom are living in extreme poverty, is totally ignored, the charity Age UK pointed out.

“It is good news that on average pensioners’ incomes have increased in the last few years, but averages can be misleading — there are still 1.6m pensioners in poverty and many others struggling on very modest incomes,” Age UK charity director Caroline Abrahams told UNITElive.

“Only around half of people aged 65 and over have incomes high enough to pay income tax, and most members of the public are surprised when we tell them that the basic State Pension that the majority of today’s pensioners receive is worth only about £7000 a year – they expect it to be much more,” she said.

Age UK’s statistics chime with Unite retired members branch secretary Gerry Hayes’ experience of the diverse group of pensioners he knows.

“I’m one of the lucky ones – I have benefited from a final salary pension scheme, but I know plenty of other retired people are struggling, barely managing to get by,” he said.

Triple-lock

The Resolution Foundation report prompted the think tank’s executive chair Lord David Willetts to call for a review of the ‘triple lock’, which ensures that state pensions rise by the same as average earnings, the consumer price index, or 2.5 per cent, whichever is the highest.

“The [triple-lock] is a very powerful ratchet pushing up pensions at a time when incomes of the less affluent half of working households are barely rising at all,” Lord Willetts told the BBC.

“I actually think pensioners worry about their kids and grandchildren,” he added. “They don’t want to live in a society where all the big increases in incomes are accruing to pensioners and other groups are being left behind.”

But Unite national officer for retired members Mike McCartney condemned the attack on the triple-lock and Willetts’ divisive language.

“The reason that the triple-lock came in was to protect pensioners against pitiful state pension rises that equated to nothing in the face of rising inflation,” he said. “We have to remember that pensioners are on a fixed income. They may get a private pension, a state pension and some benefits but these are all fixed.  They have no other viable route to increase the real income that they receive.”

“That’s why the triple lock is so important – it protects pensioners from falling through the cracks in inflationary times,” McCartney added. “Inflation has been low for the last five or six years but all the signs point to significant increases in the coming years.”

Solidarity

Hayes argues that Willetts’ comments only add to the very damaging narrative that pits young people against older people.

“There’s this idea – and even my daughter, who I’m very close to, buys into it – that so-called baby boomers are taking up all the resources and leaving young people behind,” he explained.

“But you have to understand that nothing we have was given to us – we’ve worked hard and paid into the system for decades,” Hayes added. “What people call workplace pensions I prefer calling ‘deferred earnings’.

“Many of us who are now retired are indeed very lucky to have generous work pensions schemes that may not be available to younger people in the future, but the point is that we have to continue to band together – young and old – to fight for a higher standard of living for all of us, whether it’s through higher wages, better workplace pensions or more robust benefits.

“We cannot allow those like Lord Willetts and their extreme right-wing agenda – one that’s bent only on destroying the welfare state — to divide us.”

Unite young member and shop steward Tom Duarte agrees.

“An attack against any one single group of people is an attack against us all,” Tom notes. “Today’s young people will one day be retiring so even though the triple-lock doesn’t affect us now, it will in the future. It’s much more effective to fight for what we already have than to later hope to regain something that’s lost.

“Willetts’ call to end the triple-lock isn’t about redistributing wealth to younger people in any case – it’s just a cost-cutting exercise to save money at the expense of people who’ve worked hard their entire lives.”

Age UK’s Caroline Abrahams notes that highlighting the divide between generations takes the spotlight away from the UK’s overall income inequality that’s steadily growing and threatening to tear our society apart.

“Focusing on differences by age only tells part of the story and in fact the differences in income and wealth within age groups are significantly greater than those between them, as the Resolution Foundation has also observed but which the media rarely reports,” she said.

Trade unions, Hayes believes, are the best vehicle for overcoming inter-generational animosity that’s become so entrenched and adds that his retired members branch in Dagenham has aimed to do more work with Unite’s young members.

“Trade unions are all about solidarity,” he says. “By working towards a common cause, and bringing together young members, workplace members and retired members, we can overcome all divisions.”

Tom agrees.

“Trade unions have an incredibly diverse membership,” he explains. “With young members working together with older members, unions are central in helping build links between us. This way, we discover that the struggles each group faces are in fact struggles that we all share.”