The state pension will surpass £10,000 for the first time this year thanks to the continuation of the triple lock. This is a significant step forward for older people living on a low income and a lifeline for the 15 per cent of pensioners living in poverty in the UK. A 6.7% rise in Universal Credit and disability benefits is also significant, but millions face more stringent tests over eligibility. Crucially, none of the measures announced in today’s budget will compensate for the impact of an all-time low in the means-tested social security safety net, and the added financial pressures of increases in the cost of living. As CHASM’s most recent financial inclusion monitor shows, a single working-age person only receives a quarter of what they need and families with children about half. The use of food banks may have fallen below its pandemic peak, but 2.1 million emergency food parcels were still being provided by the Trussell Trust alone in 2021/2.
It is hard to see how tax cuts and the continuation of the triple lock (at least in its current form) can be squared with a situation where significant sections of the working population remain worse off. Intragenerational inequality among older cohorts is real, but these measures can only serve to worsen the intergenerational savings gap. Any hope of closing this gap via private pension savings is unlikely to be realised by Jeremy Hunt’s plans to consult on ‘pot for life’ pension reforms. If one of the unintended consequences is that pension funds would likely compete for top earners with more retirement savings, this move would represent another step towards the financial exclusion of small pension pot holders (typically women) who already face barriers to accessing financial advice and making the most of their defined contribution savings – an all too familiar story for the women in our recent study on DC pension decision-making.