Pensioners have been the big winners of Tory tax and benefit policies since 2010, according to new research from the Resolution Foundation.
Pensioners have benefitted from the triple lock in particular, which sees the state pension increase by either average earnings, inflation or 2.5 per cent.
The triple lock has helped the state pension grow by 60 per cent between 2010-11 and 2023-24 whereas average earnings have increased 46 per cent. Working-age benefits have increased only 30 per cent over the same period.
Increases to the state pension has helped to offset the impact of the government’s tax decisions, which have actually favoured working households more than pensioners.
Recent cuts to National Insurance and the abolition of the higher personal allowance for pensioners under George Osborne have helped to rebalance the distributional impact of the triple lock.
Taking into account all government decisions on taxes and benefits, the think tank found that the average pensioner is now £1,000 better off in 2024-25 compared to 2010, whereas working age households are £760 a year better off.
“Older age groups have emerged as the biggest winners,” the Resolution Foundation noted.
Pensions are making up an ever larger part of government spending as the population ages. Spending on pensioners has increased to 9.8 per cent of GDP, or around £270bn per year, up from 9.3 per cent in 2010.
The number of people claiming the benefit has increased by 570,000 between 2009-10 and 2024-25, hitting 13m. It is set to rise further over the next parliament to 13.2m despite increases in the state pension age.
Sophie Hale, principal economist at the Resolution Foundation, said: “The combination of Britain’s big baby boomer generation retiring, and policies that have benefitted pensioners the most, has meant that the profile of Britain’s public spending has greyed.”
Both parties have signed up to policies which, over the course of the next parliament, are likely to benefit pensioners more.
The threshold freezes on income tax and national insurance will raise £8.7bn a year, but will disproportionately impact working households.
The triple lock, meanwhile, will also be maintained, which will lift pensioners’ income by an average of £360 a year in 2028-29.