UK pensions: A pre-funded state pension scheme would be fairer for the young, MPs told
People should pay for their own retirement, rather than funding the golden years of the generation ahead, a hearing on intergenerational fairness has been told today.
Speaking in front of the Work and Pensions Committee, Philip Booth, editorial and programme director at the Institute of Economic Affairs, argued that a system whereby people saved up towards their own state pension and healthcare costs during their working life, rather than paying towards these costs for current retirees instead, would be fairer for the younger generation.
Booth suggested that people's savings toward their older years should be supplemented during their working life, rather than the state topping up their pension or paying towards healthcare costs in their later years.
Booth also pointed out that the current system became particularly problematic when the younger generation was much smaller than the older generation or the older generation lived much longer than expected.
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Shiv Malik, investigations correspondent at The Guardian, added that the setup of the current pension system had a "real PR problem" and that current pensioners "don't understand that point, that Mhairi [Black, MP and member of the Work and Pensions Committee] and me are paying for their pension".
However, the MPs sitting in the hearing criticised the ideas for being too academic and not politically viable.
Those speaking in front of the commitment also remarked that making housing more affordable for younger people was critical to achieving intergenerational fairness.
Read more: The Queen would be living on £18k if she saved like we do
"There aren't many things that are a silver bullet when it comes to policy but housing comes close to that," said Booth.
Malik added that the private rental market "wasn't built for families", making the current housing landscape incredibly challenging for those who were trying to raise children.
Today's hearing is part of an inquiry into intergenerational fairness, which was launched by the Work and Pensions Committee in January.
Other notable names to speak to the committee on the topic include Michael Johnson, research fellow at the Centre for Policy Studies, Lord Willetts, executive chair of The Resolution Foundation and Steve Webb, director of policy at Royal London and former pensions minister. Meanwhile, Baroness Ros Altmann, current pensions minister, is due to give evidence on Wednesday.