‘Baby boomers’ benefit most in welfare system
SUCCESSIVE generations have received more from Britain’s welfare system than they have paid in – with baby boomers seen as major “welfare winners”, according to a think tank.
The Resolution Foundation said a serious debate is needed as to how the welfare state should be funded in a sustainable way.
Baby boomers born between 1946 and 1966 are set to receive in excess of 20 per cent more in support than they will have contributed in taxes over the course of their lives, the report said.
This calculation assumes that the costs of paying for health and pension benefits in retirement are largely met by the generations below.
By contrast, the generation above baby boomers are projected to receive around five per cent more than they paid in over their lives.
Known as the silent generation, the older generation born between 1926 and 1945 have become the biggest net contributors to the system, having started paying their taxes around the time the modern welfare state was created, the Resolution Foundation said.
It added that the prospects for later generations are uncertain, with bigger long-term questions about how the welfare state is maintained.
The Foundation said pressures on welfare spending will grow sharply from the early 2020s onwards as more of the large generation of baby boomers reach retirement and start to draw more heavily on the welfare state.
The report for the Foundation’s ongoing Intergenerational Commission looked at what people put in and take out from the welfare state over their lifetime.
By examining past, present and projected taxes and education, health and social security receipts, it estimated different generations’ overall net contributions.
The evolving nature of the welfare state, tax revenue changes and changes in society mean some age groups have benefited more than others, it said.
The Foundation claims that, with a growing pensioner population, funding extra welfare spending solely through raising taxes on the next generation of working people “will not be politically viable indefinitely”.
It said creative thinking about how the welfare state is funded in the future is needed.
David Finch, chief analyst at the Resolution Foundation, said: “From starting school and seeing the deductions in your first pay cheque to collecting your pension, people’s experience of the welfare state goes through several phases during their lives, with the NHS with them throughout.
“While benefits and contributions change at different points, many assume that it all adds up in the end.
“In fact some generations have received much more from the welfare system than they’ve paid in – with the baby boomers being the big ‘welfare winners’ to date.
“Ensuring future generations enjoy the same access to education, health and social security brings with it big challenges.”
The Resolution Foundation’s work aims to improve the living standards of people on low to middle incomes.
Some generations have received much more from the welfare system than they’ve paid in David Finch