Another pension hike just widens divide between young and old

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By Eamon Delaney 

This year, the budget saw the state pension raised again, by a fiver, just as it was last year. Indeed, the Taoiseach Leo Varadkar has said that he plans to do this every year from hereon. Before she left office, Joan Burton said she planned to do the same, increase the pension every year for four years. Why?

Is it not extraordinary to just hike the pension like this when resources are apparently scarce and needed in so many other places – and when middle income tax payers are still facing whopping marginal rates of tax, despite the small relief in the recent budget?

Is it not also a strange and expensive policy given that, to most observers, there was no real crying need for such an pension increase and no broad calls for it, beyond those quangos and groups directly involved in the sector ?. Especially when you compare the relative quiet to the noise and pressure from other areas in our society all looking for badly needed resources.

Apparently, the real reason for these increases, supported by all parties (and especially by Fianna Fail), is that the elderly vote, in much higher numbers than younger voters. They have the time and curiosity to be more involved in current affairs and make concrete decisions. A striking feature of the public meetings for the recent Fine Gael leadership contest was the senior age profile of the attendees.

Younger political activists seem to gravitate almost exclusively around trendy issues like the Repeal the Eighth and the Same Sex Marraige Referendum and then melt away from party politics and from actually voting at ‘mundane’ elections.

Hiking the pension to chase a demographic vote seems like very cynical electioneering but welcome to Irish politics, which is essentially unchanged, and unreformed, since the traumatic crash and bail out of 2010.

Far from learning the lessons of populism and over-spending, our politicians continue the tradition of ‘one for everyone in the audience’ and throwing State money at every problem – or even when there’s not a problem, such as with benefits for the elderly.

We now have, for example, the restoration of the Christmas bonus, and the telephone allowance and there are plans to abolish prescription charges, a miniscule cost to individual patients (most of them on our generous medical card scheme) but which collectively allowed the State to claw back some money.

All of these are goodies for the elderly, not demanded specifically and, a few years ago, definitely not expected. And the Irish media, which always protested that during the reckless boom years in did in fact issue warnings (when it didn’t really) is once again saying almost nothing about whether this is actually a good thing, and whether we are once more on a binge of public spending.

Sometimes one feels that the only thing that would save Ireland from repeating its fiscal profligacy are the EU’s fiscal rules. Certainly, the Troika would not have welcomed the hasty restoration of all these Bertie-era goodies and vote-chasing pension hikes. We are like children, and as soon as the Troika teacher leaves the room, we are back to our old ways.

But worse than that, this political courtship of the elderly is adding to a growing intergenerational divide in Ireland, and we now see a large and growing disparity between an often comfortable older community and an insecure, hard working (and high rent paying) younger generation.

Of course, many elderly are vulnerable and need help but do we really have to have blanket support for whole swathes of society because of their age? What about means-testing and ending the crazy and expensive principle of universality, where everyone gets benefits regardless of their income.

The reality is that the real impact of the recent austerity years were visited on the squeezed middle, and especially on young working families, as well as the very poor and the young. It was the young who emigrated, in their thousands.

By contrast, much of the older generation had cleared their mortgages, have secure pensions and avoid childcare and education costs. Granted, we also had the sudden hardship felt by so many elderly, doubly so as they cannot go out and get work.

But the ramping up of State benefits in the boom years (usually to secure votes) meant that the elderly were at least cushioned from much of the ongoing struggles of the recession, even if their benefits were cut.

With these cuts being restored, the elderly are comparatively well insulated again. Fianna Fail, in particular, seem to almost patronise the elderly as a marginalised ‘victim group’. And yet the more resources that go to the elderly the less there is to support young workers, as Paschal Donohoe discovered when he tried to find much needed tax cuts for middle income earners.

It is not the elderly’s fault, obviously. They have done their work and raised their families. It is also the modern world, and robots and globalisation and the fracturing, and the casualisation of labour with zero hours and short term contracts.

And it will only get more acute with a coming pensions time bomb where many more older people living longer and being carried by fewer younger workers.

In fact, pensions is were the divide – and dependency – between generations really hits home. The current ratio of those working to those retired is 5:1 but it is destined to go an incredible 2:1. People are now living much longer, well beyond the usual retirement age and now the retirement age will just have to be extended.

Meanwhile, we will see a rapidly rising bill for the older and generous public sector pensions while private sector pensions have eroded or been wound up.

And yet public sector pensions are not as good for younger workers, just as pay is not as good for new entrants : again, an intergenerational inequality. For nurses, teachers and gardai, a two tier pay system has developed, and the unions collluded in this – to protect their existing members, already ‘inside’.

If this all seems selfish, it is also human nature – and self preservation. And yet many elderly would be happy to contribute more. Many of them, especially the affluent, say they do not need the extra pension hike that Fine Gael and Fianna Fail keep giving them. They would more happily see the resources go to help struggling families and taxpayers getting nailed when they earn more.

But when we have a populist political culture which courts certain demographic votes regardless of the public cost, even this sense of overall communal solidarity is lost sight of.