12 Jun 2020
Our Director of Evidence, Claire Turner, argues that framing debates about the recovery as 'old vs young' won't help us reach the right solutions.
As the economic cost of lockdown becomes clearer, it is perhaps inevitable that the debates over who must cough up to pay for it are entering full flow. Once again, it seems, battle lines are being drawn along intergenerational lines: the young, so the story goes, have lost out economically so that the old can survive the virus. Not only is this a reductive and needlessly divisive way of framing the debate, it doesn’t tell us everything we need to know about who is at risk of hardship in the months ahead – or what measures we need to support those who have been hit the hardest while we get the economy up and running again.
At the centre of the current row are renewed calls to scrap the triple lock on pensions. Part of this is a short-term issue resulting from the expected rise in wages in the next year as lockdown lifts, following the sharp fall this year – which would see pensioners receiving an 18% increase. This statistical anomaly could – and may well – be remedied with a one-year suspension in the triple lock. But this must not lead to abolishing the guarantee of an adequate pension by the back door with no alternative measures in place.
This pandemic has already hit the poorest hardest. The Resolution Foundation have previously highlighted the disproportionate impact of health risks and job losses on the low-paid, and their new report shows that poorer families are more likely to be saving less or increasing debt as a result of coronavirus than wealthier families. The pensions triple lock, while not a perfect tool, plays a vital role in providing an adequate basic income to those who rely on the state pension for their main, or only, source of income. For those people, this is already a very limited amount: the UK has one of the least generous state pensions in the OECD. And a 2018 report found that scrapping the triple lock could see the number of pensioners in poverty rise by 700,000 by 2050.
Our new research warns that these challenges could be compounded by the lockdown, with nearly half of 50-70s saying they expect their financial situation to worsen in the coming year.
Crucially, while scrapping the triple lock would have a negative impact on today’s pensioners, the impact on future generations of retirees would be much greater, as they stand to gain the most from the guaranteed rise in the state pension. Many of those set to enter retirement in the next couple of decades are already facing real challenges to their financial security, with more people still renting in their 50s and beyond, and over 50s who fall out of work often finding themselves locked out of employment many years before the state pension age. Our new research warns that these challenges could be compounded by the lockdown, with nearly half of 50-70s saying they expect their financial situation to worsen in the coming year – and less than 40% of those who are currently unemployed or furloughed hopeful of getting back into work in the future.
Rightly, many commentators are calling for those with the broadest shoulders to take on a greater share of the financial burden as we begin to rebuild our economy. But it does nobody any favours to use ‘old’ as a proxy for ‘rich’ – nor to pretend that the health and financial impacts of the crisis can be neatly divided along age lines. In June, the ONS estimated that 100,000 people under the age of 20 were shielding due to conditions that made them particularly vulnerable to the disease. And over 60s are the group most likely to have lost hours and pay due to lockdown.
Instead, policy-makers must think carefully about solutions to support people at all ages as we come through this crisis. Scrapping the triple lock is an appealing and headline-grabbing response to debates around intergenerational conflict. But if it is scrapped without sufficient other measures in place, it’s future generations that will be hit hardest. Rather than a generational blame game, we need to see real support for those on low incomes or in insecure work whatever their age, or we risk the next generation of pensioners entering retirement worse off than the last.