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The Intergenerational Contract – where are we now?

The Intergenerational Contract – where are we now?

Earlier this year the Resolution Foundation published a report, A new Generational Contract, which examined the intergenerational divides between a number of cohorts.

The Resolution Foundation’s recommendations centred on improving the position of millennials compared to the older generations and kick started a greater focus in Westminster and Whitehall on the so called ‘intergenerational contract.’

Later Life Ambitions has been taking an active part in this debate. We recognise that society and the welfare state are underpinned by an implicit social contract between the generations and welcome a renewed focus on this over recent months and the surrounding discussion it has generated.

However, we are concerned that a failure to consider the wider context of intergenerational inequality may result in a picture that is both overly simplistic and unnecessarily divisive.  In order for the debate to be adequately nuanced it must also focus on the inequality within generations. It is not accurate to class all older people as being better off than younger generations, nor is it accurate to claim that all younger people are struggling to get by. While there are certain trends that can be identified, this understanding is crucial to the intergenerational debate.

Furthermore, the differences in income and wealth within generations are significantly greater than the differences between the generations themselves. This is a clear and consistent finding from official statistics that is usually omitted from these debates.  Research by Age UK has found that there is considerable variation in how people experience later life, with one in six pensioners or 1.9 million people, currently living in poverty in the UK, an increase of approximately 300,000 pensioners since 2012/13.

We recognise that workers today are ‘pensioners in waiting’. Given changes in pension entitlements, we are concerned about the reduction in quality of retirement provisions. Younger generations are denied access to defined benefit (DB) pension schemes and lose out on the ability to secure a sustainable and adequate income in older age. This is a short-sighted approach which creates problems for later life. Instead, the government and employers must ensure that future pensioners are given adequate opportunity to prepare for their retirement, with fair remuneration packages and a sustainable and fair way of developing retirement income.

Our members have also highlighted their concern that a continued focus on intergenerational fairness is divisive. Instead, as one of our members said, society should look to foster “harmony, over discord”, through working to alleviate the real causes of unfairness such as insecure and low paid work and a lack of affordable, quality housing.

We will continue to represent our members in this important public debate and make sure that your views are put forward. We have submitted evidence to a House of Lords Committee set up to examine this topic and will continue to seek constructive opportunities to engage with Parliamentarians.