Old vs young: a new battleground for pensions inequality
Over the past year it has become clear that a generational pensions divide has opened up and it goes beyond the older haves and the younger have-nots.
It has been written about numerous times, we know the older generation has had it better when it comes to pensions, benefitting from generous defined benefit (DB) workplace schemes and a state pension that is still given to them at a reasonable age.
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On the other hand we have younger generations who have seen state and employer support stripped away so we are left with defined contribution (DC) pensions, little hope for the state pension with the burden of providing a comfortable later life lies squarely on our shoulders.
But there seems to be another generational shift happening and it's around trust.
The pension freedoms have spelt out clearly that older people can be trusted with their money and they are now free to spend it how they wish – Lamborghini or otherwise.
Older generations are seen as sensible and frugal, and as such are treated as if they have never set a financial foot wrong. In fact they are being encourage to spend, spend, spend their pension cash because they deserve it (and of course it doesn't do any harm to the government coffers).
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Demonising the young
On the other hand we have a growing rhetoric around working age people not saving enough and further talk of making semi-mandatory auto-enrolment compulsory for all. Young people are treated as if they are feckless spendthrifts who don't know what's good for them so the government has to step in and intervene to make sure they're putting money aside for their very far off retirements.
It's a double-standard that is holding older people up on a pedestal while tut-tutting at young people who don't save enough – while ignoring the fact that the cost of living, buying a property and student debt are weighing down younger generations.
This inequality is frustrating. It is not that young people don't want to save, they can't afford to and that is the problem the government should be addressing rather. Why not increase the minimum wage, stop subsidising employers who pay low wages with tax credits, and put an end to zero-hours contracts?
All these solutions are far harder than demonising young people for not saving, demonising them because they can't possibly hope to achieve the levels of wealth in retirement that older people are now being encourage to spend.
Read more:
Pensions freedoms: one in eight will take it all out
Workers are turning down generous pensions
George Osborne's £1bn pensions mis-selling risk
