Pensioners 'biggest beneficiaries of tax and benefit changes' since 2010

Spending on pensioners has grown from 9.3% of GDP in 2009-10 to 9.8% in 2024-25

A think tank has revealed that pensioners have benefited more than working-age households from tax and benefit decisions since 2010.

The Resolution Foundation stated that the average pensioner is £900 better off due to changes in benefit policy since 2010, while non-pensioner households are on average £1,400 worse off due to a less generous social security system for working-age families. The triple lock, which annually increases state pensions, is a key factor behind the financial improvements for pensioners.

This mechanism has resulted in the state pension growing by 60% between 2010-11 and 2023-24, outpacing the 46% growth in average earnings, according to the report. The study found that demographic pressures and policies have shifted state spending towards pensioners since 2010.

Despite the rise in the state pension age, the number of people claiming the state pension increased by approximately 570,000, from 12.4million to 13million, between 2009-10 and 2024-25, and is projected to reach 13.2million by 2028-29. The foundation highlighted that this demographic shift means a larger portion of public spending, including the state pension, other pensioner benefits and old-age health spending, is concentrated on this older group.

Research funded by the Nuffield Foundation showed that spending on pensioners has risen from 9.3% of GDP in 2009-10 to 9.8% in 2024-25. While pensioners have generally fared better due to benefit policies, tax changes like the recent employee national insurance cuts have shifted the balance between "winners" and "losers", a report has highlighted.

The study shows that by 2024-25, pensioner households will be up £1,000 annually on average, thanks to all permanent tax and benefit changes since 2010, whereas working-age homes will see a £760 yearly boost. But others will lose out.

Families with children under 14 are set to be £780 worse off each year by 2024-25, as any tax benefits are swallowed up by reductions in child-related benefits, the analysis reveals. The foundation insists Britain's big challenge is kick-starting generational advances in living standards.

Those born in the late '80s were earning 8% less at 30 than folks born a decade prior at the same age. To get generational progress back on track, the foundation believes robust economic growth is crucial, rather than age-specific policy interventions.

Sophie Hale, principal economist at the Resolution Foundation, said: "The combination of Britain's big baby boomer generation retiring, and policies that have benefited pensioners the most, has meant that the profile of Britain's public spending has greyed. Overall pensioners have gained more than working-age households from tax and benefit decisions since 2010, while families with children have seen support fall by £780 a year."

She stated that although both the Conservatives and Labour have a variety of policies aimed at specific age groups, "ultimately these policies won't decide whether the new generation of young adults enjoys higher living standards than their predecessors". She added: "That will only come from stronger economic growth," she added.