We don’t need to ‘featherbed our pensioners’

In the recent Times article, ‘Can we afford to featherbed our pensioners?, Paul Johnson, Director for the Institute of Fiscal Studies presented just three choices of how Britain will find £12 billion a year to fund pensioners’ benefits.

These ‘choices’ were – reducing benefits and services for the old, recognising that demands on the state have risen and therefore increase the size of the state and hence taxes or continue to make big cuts to spending on most other things that the state does.

Are these really the only options?

One practical solution overlooked here is for retired people to sell their homes, release capital to fund their retirement, downsize and rent on an assured tenancy.

70% of over 65s are homeowners in the UK and it is estimated that 8m live in under occupied family housing. Just 4% still has a mortgage and the value of property is estimated by the Council of Mortgage lenders as around £1 trillion. Unlocking this windfall wealth would go a long way to funding the cost of an ageing nation.

Recently there has been much criticism of the retired remaining in their under occupied homes, however, there is a major shortage of attractive housing for older people, creating a barrier to downsizing and a property bottleneck. The government’s recently announced ‘Help to Move’ scheme to finance older people’s moving costs simply won’t work unless more suitable retirement housing stock is built both in rural and urban locations.

Rather than be a ‘drain on the nation’s wealth’ – older people need new investment opportunities which would enable them to sell their biggest asset (their homes), invest the money to yield an income to fund their rent and living costs and potential care costs in the future.

We don’t need to ‘featherbed our pensioners’ – we need to provide investment opportunities and appropriate retirement housing.

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