Pensioners £900 better off from tax and benefit changes
Pensioners have gained more than working-age households from tax and benefit decisions since 2010, with the average pensioner £900 better off.
A study by the Resolution Foundation showed that the average pensioner is £900 better off as a result of benefit policy changes since 2010, while the average non-pensioner household is £1,400 worse off amid a less generous social security system for working-age families.
Demographic pressures and policies have shifted the balance of state spending towards pensioners since 2010, researchers found. Despite state pension age rises, the number of people claiming the state pension rose by around 570,000 to 13 million between 2009-10 and 2024-25. It is set to rise to 13.2 million by 2028-29.
Spending on pensioners has also grown from 9.3% of GDP in 2009-10 to 9.8% in 2024-25, according to the research, funded by the Nuffield Foundation.
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The triple lock, which is used to increase state pensions annually, is a driver behind the improvements for pensioners. It has led to the state pension growing by 60% between 2010-11 and 2023-24, faster than the 46% growth in average earnings, the report said
Looking at all permanent tax and benefit changes since 2010, the research found that some groups have been left worse off, according to the think tank. For example, households with children aged 14 and under are typically £780 a year worse off in 2024-25, as any tax gains have been more than offset by cuts to many child-related benefits, the report said.
The Foundation argued that the main task facing the UK is to restart the generational progress on living standards. People born in the late 1980s earned on average 8% less at age 30 than people born 10 years earlier did at the same age, it said.
Sophie Hale, principal economist at the Resolution Foundation, said: “The combination of Britain’s big baby boomer generation retiring and policies that have benefited pensioners the most, has meant that the profile of Britain’s public spending has greyed.
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“Overall pensioners have gained more than working-age households from tax and benefit decisions since 2010, while families with children have seen support fall by £780 a year.”
She said that while both Conservatives and Labour have a wide range of policies targeted at specific age cohorts “ultimately these policies won’t decide whether the new generation of young adults enjoys higher living standards than their predecessors. That will only come from stronger economic growth,” she concluded.
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