Experts Blame No Pay Rises To Baby Boomer Pensions
What did our elders do this time?
According to the Resolution Foundation, an economy think-thank, a link between no-wage-rise companies and pension liabilities for older staff increase. You could guess what it is.
Why is it that despite the economic increases in the last few months or years have not borne fruit among career-oriented youngsters and millenials when their companies haven’t bought anything expensive enough to stall the rise?
Oops, they have. They promised Baby Boomers a guaranteed pension benefit.
Thousands of UK companies need to fill the gap their retiring Baby Boomer employees need to fill in, taking a swig from new pay rises to complete the final salary schemes of their baby boomer employees.
Most companies, including those in the FTSE 100, have huge pension deficits offsetting plenty of pay rises for new employees. Today, many workers have lost much in the form of no wag rises in the last few months.
The Resolution Foundation indicates pensions will affect pay packets for several more years.
Economists believe that the huge pay rise gaps have also increased growing inequality between working generations.
Companies and firms cannot bail out on the final salary pension payouts as Baby Boomers have successfully lobbied and defended their retirement funds despite economic changes in the future.
Wage schemes in different companies differ immensely. An unequal slice is given to employees who are better off. The rest of the money ends up in other forms of compensation, including pensions.
Resolution Foundation Chief Economist Matthew Whitaker said:
“There is of course much uncertainty over how the relationship between productivity and pay will evolve in the coming years. However, the compensation effect – which has grown in importance – looks as though it will remain significant in the medium term.”