Election 2015 Wales

MPs to look at income inequality between old and young

Pensioners eating ice cream Image copyright Getty Images

Financial inequality between generations will be the subject of a new MP-led inquiry.

MPs will look at whether those in the baby boom generation are better off than their children.

Several studies suggest those in their teens and 20s will be the first generation since World War II to be worse off than their parents.

The inquiry will look at whether this is a result of government policy or broader economic trends.

The House of Commons Work and Pensions select committee of MPs said those born in the middle of the baby boom (between 1956 and 1961) had been forecast to receive 118% of the amount they contributed to the welfare state in taxes and national insurance contributions.

Fair and affordable

The Committee's chairman Frank Field MP said voters currently had two priorities for welfare reform: was it fair, and was it affordable.

"Politicians of successive governments have ducked both of these fundamental questions when it comes to the different levels of income afforded to those above and others below retirement age," he said.

"Is it fair and affordable to divert a large and growing sum of public expenditure toward pensioners - regardless of their circumstances - while mainly poor families with children face year-on-year restrictions on their income? Can the "triple lock" pension increase pledge be sustainable? Or are these policies necessary to guard against pensioner poverty?

"The select committee hopes to learn from voters of all ages what they believe to be both fair and affordable, so we can propose ways of restoring confidence across all generations in the welfare state."

The inquiry comes months after a study by the Institute for Fiscal Studies (IFS) concluded that young people are on track to be poorer than their parents at every stage of their lives.

The study found that average working-age households actually grew richer during the financial crisis.

But it said that the reason for the growth between 2006-12 was the increase in pension values over the period.

"Despite the financial crisis, household wealth on average increased in real terms over the late 2000s, driven by increases in private pension entitlements," Dave Innes, a research economist at the IFS said.

"Even with these increases in average wealth, working-age households are at risk of being less wealthy at each age than those born a decade earlier."

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