Pensioners ‘should share the pain’
Pensioners should “share the pain” of austerity cuts and pay more tax to promote inter-generational fairness in the housing market, a think-tank has said.
The Fabian Society claimed high-levels of home ownership among older people threatens fairness, as middle-income workers’ wages stagnate and they cannot afford to buy a home.
More than three-quarters (76%) of pensioners now own homes, compared with just over half (58%) 20 years ago, while the last decade has seen a “dramatic fall” in home ownership among under-45s, the think-tank said.
In 1979, the year Margaret Thatcher came to power, middle-income working age households enjoyed an income 93% above that of middle-income retired households. That figure is now 37%, the study showed.
The society said this had “profound implications” and there should be a “presumption of equality” as “old age is no longer a proxy for poverty”. It said: “In public policy and deficit reduction measures, ministers should adopt a presumption of equality across age groups. In financial terms alone, older people are no longer distinct and blanket policies favouring them should be reviewed.”
The society argued that pensioners’ taxes should increase, their benefits be cut, and a tax on property wealth should be introduced.
The key policy should be to raise taxes on pensioners so the 27% they pay as a portion of their gross income would rise to 33%, in line with working age households with the same income. This would raise £7.2 billion every year, the society said. But the project should be long-term, to avoid a sharp drop in living standards.
In the meantime, the Government should consider measures such as taxing private pension lump sums, as part of a “grand bargain” that would help fund universal care services.
Specific universal benefits such as the winter fuel allowance – which contributes 3% to middle earning pensioners’ incomes – could be re-assessed without threatening the wider principle of universalism, the think-tank said.
The Fabian Society was invited to carry out the research by Hanover, one of the UK’s largest providers of old people’s housing. The think-tank said it “analysed data to explore the incomes, wealth, housing and social circumstances of older people in the middle – and the implications for public policy and services”.
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