Now this has been going around in my head since I watched Dispatches on Channel 4 last Monday (18/3/13), the subject was on “rich” pensioners and the universal benefits system for people in retirement. Benefits for pensioners currently make up a little under half the UK’s benefit system of £220bn, which is larger than our intake from income tax, £155bn.
The program listed all the age-related benefits pensioners enjoy.
- State Pension
- Winter Fuel Payment
- Cold Weather Payment
- £10 Christmas Bonus
- TV license for over 75 year old
- Higher Personal Tax Allowance
- Exemption from National Insurance contributions
- Free NHS Dental treatment
- Free NHS Prescriptions
- Free NHS Eye Test every two years
- Voucher towards the costs of glasses/contact lenses
- Contribution to travel costs for NHS appointments
- Free NHS wigs
I think it is important to point out that I fully support a universal state pension and exemptions from national insurance, however surely this is where it should stop for any universal benefit system for retirees. All otherbenefits should be means tested and only provided to those who cannot afford it or need the extra income to improve the quality of their lives, and I mean actually using the winter fuel allowance for a gas bill and not on a case of red wine to ‘warm your soul’.
The widely offered opinion from many retirees or people nearing retirement is that they have paid taxes all their lives and deserve all they get in retirement, especially if the money goes instead towards funding the benefit hungry lifestyles of the youth. Now, I have no problem with people believing if they paid taxes in during a full working life then they should expect the state to help fund their retirement. The problem is not the grievance with any move that would take universal retirement benefits and reallocate them within the benefits system to people who are seen as work shy. My problem is the lack of forward thinking as to who will in the long run pick up the bill.
The economy is already is a pretty shocking state and we simply can’t afford the growth in retirement benefits that the “baby boomer” generation will bring. If, like me, you are in your twenties with, in all likelihood, 50 years of working ahead of you the levels of taxes we will pay in our lifetime will be incomparable to those currently in retirement or nearing it. Without a drastic change to the current system it will not be the work shy who benefit, it will be the hard working who forfeit more income in taxes to cover this retirement income.
The power held by the “grey” voter is unprecedented. Any government who even murmurs of addressing this problem is threaten with losing the seat of power, and this is where the system fails. The government should not be addressing this as removing universal benefits but a spreading the load away from the next generation. The message should be,
‘Does Malcolm, who has worked hard and paid taxes all his life and is more than comfortable in retirement, want his son or daughter, who is also working hard and paying taxes, to have anything near the quality of life he has/had? If so he needs to sacrifice those benefits that are not directly needed, and accept a means tested system for all but the standard state pension. His son or daughter will already have a lower quality of life if he or she earns the same amount as Malcolm in his life, without addressing universal benefits it will be even worse.’
The problem with the “benefits generation” who move straight in to the system at 18 and show no desire to move off it is a far greater problem than redressing the universal benefits for those in retirement. Bringing it into the argument only muddies the waters.
Now don’t get me wrong I am not having a go at a generation who have worked so hard to build the UK economy to be a world leader in many sectors. There are huge problems with my generation and our attitude to saving for retirement. To put it simply, if you are over 25 and don’t have a pension you need a slap, if you have opted out of a work placed scheme you need two slaps and if you opt out of NEST you need not continue, please bury your head and forgo you right to retire. But without redressing the age-related universal benefits the cost will spiral as the number of pensioners increase and it will be the younger generations and those to come who will be paying off an exponential bill.