Government needs to promote ‘intergenerational fairness’ says Aegon
Steven Cameron, pensions director at Aegon, said the government should create a set of principles to test all government policies against. This would ensure that policymakers are looking across generations and will avoid overburdening one generation at the expense of another.
There has been increasing unease that the burden of both austerity and taxation is falling too heavily on younger generations, while older generations – an important voting cohort – have suffered little impact from government cuts. In the last election, this was played out through the controversial ‘triple lock’, which ensures that the state pension rises by the higher of inflation, wage growth or 2.5%.
Nevertheless, Cameron urged the government to resist tinkering with the pension taxation system. He said: “We’re hoping the Chancellor goes a step further than Work and Pensions Secretary, David Gauke, and firmly rules out any short-term changes to the pension tax relief system. Not only could such changes be damaging to the next stage of the roll-out of automatic enrolment, but they could cause further financial uncertainty amongst savers on top of Brexit.”
On social care, Camerson said the government needs set the pace for finding a long-term solution to the growing crisis of an ageing society, offering a ‘sustainable deal between individuals and the state that can give people certainty over what the government will pay and what they’ll be personally responsible for’.
He also suggested reform of Stamp Duty, pointing out that it is creating inertia in the housing market. It discourages first-time buyers from getting on the housing ladder while discouraging older generations from downsizing. He added: “Moving to a smaller property would not only free up family homes to those in greatest need, it could also free up funds for property rich, pension poor older generations to fund an increasing longer and more costly retirement.”