Baby boomers are major ‘welfare winners’, report finds

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 over 20% 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 5% 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 welfare system runs on a “pay as you go” basis, with workers contributing to fund support for children, pensioners and people in need.

People start their lives as net beneficiaries of the welfare system and start contributing during their working lives through taxes. On average, they become net welfare contributors in their late-30s, and become net beneficiaries again in old age as they receive healthcare and pensioner benefits, the Resolution Foundation said.

The Foundation said creative thinking about how the welfare state is funded in the future is needed.