Generation game: young people to work for longer

As predicted, Mr Osborne announced that the age at which someone is eligible for their state pension will go up.

This will mean people in their forties will have to wait until they are 68, and people in their thirties and younger will have to wait until they are 69.

The delayed retirement dates will help save around £500bn from the national pensions bill over the next 50 years. This saving is on top of more than £100bn already banked from planned rises in the retirement age to 66 by 2020 and 67 by 2028, which are unchanged.

Hard on the young?

The government said that future changes in the pension age will be based on the principle that workers should expect to spend about one third of their adult lives, on average, in retirement.

Pensions expert Ros Altman welcomed the changes, which she said should have been brought in sooner:

Wealthy retirees have been let off once again, whilst young people have to work longer and pay more – Angus Hanton, Intergenerational Foundation

“We have been through a period of unrealistic expectations which even led people to believe that early retirement was something to aspire to. This is totally unsustainable… People will need to supplement the state pension with other income. That could be from private pensions, other savings or continuing at work part-time.”

But for some commentators, the idea that the younger generation should bear the burden of the savings was manifestly unfair.

Angus Hanton of the Intergenerational Foundation said: “Wealthy retirees have been let off once again, whilst young people have to work longer and pay more… Means testing the state pension would foster greater intergenerational solidarity.”

Welfare cap

The chancellor also announced that a new cap on the total amount that could be spent on welfare would not include pensions.

Mr Osborne told the Commons: “I have had representations that the basic state pensions should be included within that cap, but that would mean cutting pensions for those who’ve worked hard all their lives, because the costs on, say, housing benefit for young people, had got out of control. That is not fair.”

Mr Hanton commented: “the welfare cap once again rewards older generations to the detriment of younger workers.”

Employment boost

With almost one million 16-24 year-olds unemployed, the chancellor’s surprise announcement that employers would no longer have to make National Insurance contributions for workers under 21 was welcomed in many quarters, as was the announcement that the number of higher level apprenticeships would increase by 20,000.

There was also more money in Mr Osborne’s plans for support 16 to 17-year-olds at job centres.

Expanding education

Mr Osborne announced that within two years there would be no limit on the number of places that universities could offer to students, with extra funding going to science, technology and engineering courses. He told the Commons “our reforms to student loans, difficult as they were, have put our universities on a secure footing.”

But his plan to finance this expansion by selling off the old student loan book was a matter of concern to some, with Angus Hanton warning that proper consumer protection was vital to avoid the sell-off of student borrowing throwing young people to the sharks.

Perhaps now young people will realise that politics is worth voting on. Govts don’t mess with pensioners cos they vote

— Krishnan Guru-Murthy (@krishgm) December 5, 2013