Pensioners are in pretty good financial shape, and it’s the young who are paying

I found myself in some trouble with a few readers last month when, during an interview on the BBC, I referred to pensioners as being one of the richest groups in the UK.

But the more you look into the statistics on the matter, the more clear it becomes that while they aren’t necessarily the highest income group we have, add in assets and benefits and the over 65s are on average in pretty good financial shape.

This was a point brought home yet again by the cover story in the FT the other day on the subject of why the UK is no longer a “country for young men”. The “young and carefree” used to have some of our highest living standards. Before the financial crisis they were better off than some 60% of the rest of the population. Today, that number is 37%.

Who has taken over their position as living-standard top dogs?

It will be no surprise to learn that it is “those in their 60s and 70s”. The average 65-70 year old used to have a lower living standard than 75% of UK families. Not any more. Today they’re in the top 40% of family incomes.

This change has a variety of reasons. There is the huge rise in house prices over the last few decades.

There is the end of the final salary pension system and of the kind of lifetime employment possibilities that it ran alongside – not many of the young get to take jobs and then look forward to automatic promotion and wage rises any more.

There is the fact that falling real wages since the financial crisis have hit the young much harder than the old.

And finally there is the fact that universal benefits for pensioners are persistently preserved. Since the financial crisis, £7bn has been cut from working-age benefits, but roughly the same amount has been added to pensioner benefits.

Almost everyone now seems to agree that it is time to means-test some pensioner benefits (bus passes and fuel allowances, perhaps). Indeed, the only person who doesn’t agree with this appears to be David Cameron. He has this to say on the matter: “There are those who say that it’s an unnecessary luxury in a time of national financial difficulties. They’re wrong.” Hmmm.

PS An interesting solution to the matter of who should and should not get a bus pass appeared in the letters section of the FT today. Robert Simons suggested that they should be given only to pensioners who don’t have driving licences – this would leave them still available to all those on very low incomes (who would be unlikely to keep cars) but also “provide an incentive to the elderly to cease driving”).

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