Baroness Altmann tells MPs that UK pension system not as unfair as critics say

 
Hayley Kirton
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Baroness Altmann slammed the "myth" of wealthy pensioners (Source: Getty)

The pensions minister has today told MPs that the UK's pensions system is not as unfair to younger generation as some critics have said it is.

Speaking in front of the Work and Pensions Committee today, Baroness Ros Altmann cast doubt on the idea that today's retirees are living a life of luxury to the detriment of those currently of working age, pointing out that just 5.4 per cent of GDP is currently put towards spending for pensioners.

"Most pensioners are not well off," Altmann said. "This is a myth." She added that there were still more than 1m pensioners who were living in relative poverty after housing costs.

However, the members of the committee argued that government spending relating to working households had experienced steeper cuts in recent years, compared with cuts on spending compared with those who are retired.

Read more: Ros Altmann "delighted" there was not a move to pensions ISA

The committee also suggested that the minister's department should look into what intergenerational accounting and intergenerational impact assessments could do for its policy decisions.

However, Baroness Altmann stated that she did not see what insight this would add that was not covered by analysis already carried out. She said, for example, the new state pension reforms had explicitly taken into account what needed to be done to make sure the younger generation was not unnecessarily burdened.

Read more: The £8k lifeboat over 50s are relying on

Baroness Altmann also criticised the argument that older people were better off because a greater proportion of this age group owned property compared with their younger counterparts.

"You can't live on the value of your house. You can crystallise it but it's the income that you're living off that is relevant," said the pensions minister.

Baroness Altmann also declined to give further details on plans for transitional arrangements for women affected by changes in the state pension age, remarking "I do care [about those affected] and I'm not rowing back but I have nothing to add [at this time]".

Today's hearing is part of an inquiry into intergenerational fairness, which was launched by the Work and Pensions Committee in January.

Read more: Three charts that show if you can ever afford to stop working

Earlier this week, the committee heard from Philip Booth, editorial and programme director at the Institute of Economic Affairs. He argued that a pre-funded scheme, whereby each generation pays for its own retirement costs rather than the costs of the generation ahead of it, would be much fairer on younger people.

The committee has also heard from 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 on the topic of intergenerational fairness since the start of the year.

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