Axe state pension for the rich, says OECD

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Axe state pension for rich says the OECD

Financial planning in association with Scottish Widows bannerState pension cut for the top 5 to 10 per cent of earners would benefit the worse off, thinktank argues

Britain should halt state pension payments to the country’s richest people and re-route the money saved to benefits for the nation’s poorest, according to the Organisation for Economic Co-operation and Development (OECD)

The Paris-based thinktank said the move would “free up resources,” as presently anyone who has paid national insurance contributions for over 30 years is eligible for the UK’s state pension – meaning that it can be claimed by billionaires.

Mark Pearson – deputy director of employment, labour and social affairs with the OECD – told the Financial Times that the UK faces the challenge of an ageing society and a shrinking workforce:

“Faced with these pressures, are you going to ask people of working age to pay more, or people to work longer before they can claim their pension?

“Or another way to ensure an adequate pension is to think about whether the pension should only be paid to those who really need it, to ease the tyranny of the maths.

“Giving less [pension] to the people at the top would free up resources to increase general benefits.”

State pension – ‘scrap triple lock’

He added the the ‘triple lock’ on pensions – which guarantees that the basic state pension will rise by a minimum of either 2.5 per cent, the rate of inflation or average earnings growth, whichever is largest – should be scrapped.

The policy, introduced in 2011 by the coalition government put “one group in society [pensioners] on a pedestal over another”, said Pearson, who suggests uprating the state pension by either average earnings or prices instead.

He added that Britain’s pension system is among the least generous of the OECD’s 35 member countries. “The UK pension is pretty low,” he said of a basic state pension worth £6,360 a year, and a full new state pension – introduced in 2016 – worth £8,297 a year.

Former pensions minister Steve Webb, however, is against the move: “What happens to the rich has a knack of spreading and you could end up undermining the whole idea of a contributory system,” he said.

 

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