Pensioners have “stopped being poor” but their benefits will top £12bn by 2019, says IFS boss
Government benefits for pensioners will cost £12bn more per year by 2019 if the current system is kept in place, according to the Institute for Fiscal Studies (IFS).
The massive increase in spending would come about even though pensioners are on average wealthier than those still in work. The IFS argued "pensioners as a group have stopped being poor".
The UK's population is ageing rapidly and in just six years' time there will be an extra two million people over the age of 65. The government's "triple lock" scheme, which guarantees an above inflation-increase in the state pension, is likely to prove especially detrimental to the public finances.
Writing in The Times, director if the IFS Paul Johnson said:
In 2011, for the first time, the average incomes of pensioner households — adjusted to take account of housing costs and the costs of children — rose above the average incomes of the rest of the population.
He added:
Those currently retired and those hitting state pension age over the decade have been spared most of the effects of austerity, at least in terms of their incomes
There are only three realistic ways for the chancellor to dig the country out of the hole. These are cutting benefits, raising taxes or cutting public spending in other areas.
In a pre-autumn statement briefing yesterday, Ryan Bourne, head of public policy at the Institute of Economic Affairs said the triple lock had been a "costly mistake" and pensioners would need to shoulder more of the responsibility for deficit reduction, especially given the substantial cuts to working age benefits.
Johnson's article will put even more pressure on the chancellor to take a second look at how the elderly are privileged in terms of spending priorities.
The disparity between Britain's young and old was highlighted by a Joseph Rowntree Foundation report yesterday that showed a rise in the number of young people falling into poverty.
By contrast, the number of pensioners in poverty has plummeted over the last 10 years and were lower than at any point since records began. In 2012-13 less than 15 per cent of pensioners lived in poverty.
Johnson said the fall was "probably the greatest triumph of social policy during my lifetime".