The UK should cut state pensions for high earners according to the Organisation for Economic Cooperation and Development (OECD). The funds could then be diverted to to help people whose pension payments are low.
In a move that could see real life Robin Hood action, the government have been advised to not pay the top 5-10 per cent of earners a state pension. By diverting funds from the wealthiest retirees, resources would be freed up for the poor.
Mark Pearson, deputy director of employment, labour and social affairs with the OECD said many countries like the UK are under pressure due to the ageing population, the Financial Times reported.
Mr Pearson said the transfer of funds would “ease the tyranny of the maths” and that the “UK pension is pretty low”.
He said: “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?”
Mr Pearson added: “Or another way to ensure adequate pension is to think about whether the pension should only be paid to those who really need it…Giving less [pension] to the people at the top would free up resources to increase general benefits.”
The OECD is a unique forum that aims to help governments fight poverty and grow prosperity through establishing financial stability and supporting economic growth. It said that the UK retirement benefit is one of the least generous out of the 35 member countries. Currently, the basic state pension sits at £6,359 a year and £8,296 for the new state pension which was introduced in 2016.
Pensions are expected to be a key element up for debate in the run up to the UK general election in June. The focus will lie on the fate of the ‘triple lock’ – a guarantee to increase the state pension every year by the higher rate of inflation, average earnings of 2.5 per cent. Theresa May dodged the question as to whether she would scrap the ‘triple lock’ during Wednesday’s prime minister’s questions.
She said “pension incomes would continue to increase” under a Conservative government but this could be under a less generous ‘double lock’ guarantee.
UK pensions are not currently means-tested. Every citizen is eligible to receive a state pension once they reach retirement age. Do you think higher earners should have their state pension cut? The government will have to carefully consider the advice they have been given.