They may have toiled for decades, but pensioners are still paying for the mistakes of latter governments. That certainly was the case this week following the Budget announcement, in which Chancellor George Osborne sought to raid £3 billion out of pensioners’ pockets. The “granny tax” has turned out to be just another farce to serve high-earners, cutting the 50p top rate for Britain’s wealthiest earners.
The government has put a spin on the whole ‘pensioners will be better off’ slant by stating a move towards a simplified single personal allowance. By freezing existing Age Related Allowances (ARAs) from 6 April 2013 until they align with personal allowances, and withdrawing ARAs from new pensioners; almost 360,000 people could lose £285 per year. A little contradictory to their ‘better off’ angle, especially as the richest 1% (earning more than £150,000), are having their taxes cut.
No doubt, young people are also receiving the short end of the straw. But while we may feel that work invades the majority of our lives now; improvements in technology, with easier-to-use computers now on most people’s desks, have meant that we are working on at a less frenetic pace than back in 1995.
Dr Burchell, a senior lecturer in the sociology department of Cambridge University, has with European colleagues been surveying workers every five years. The long-running study found that in 1990, British workers on the verge of retiring now spent 37% of their day working intensively. This increased substantially in 1995 to 49%, as the great majority of offices started to adopt computers on a widespread scale. However, in 2000 the figure fell to 45%. In the latest update, covering 2005, the figure has fallen again to 40%.
The Office for National statistics also dispels the myth that we are working longer hours now, as earlier this year; the average hours worked per week was 31.7, while in 1995 the number of hours worked by the average full-time worker was 38.5 hours a week. So is it really fair to ask those who spent the last four decades working intensively in technologically disadvantaged workplaces, to then foot the bill for the rich and privileged?
The Treasury acknowledged that some 4.5 million pensioners will lose out as a result of a decision to phase out ARAs, however to add insult to injury, businesses will also profit from the Budget as another 1% cut has been made in the rate of corporation tax.
The ‘Sheriff of Nottingham’ has also said that by 2014, the tax rate will drop further to 22%, despite pensioners earning a lower income of £10,500 to £24,000 unfairly losing allowances. Pensioners with an income of more than £30,000 (a mere 10%) will not be affected at all because they would not have received the extra allowance.
Saga director-general Ros Altman said on Twitter that pensioners have already been hit by high inflation and low interest rates giving them little return on their savings. Ms Altman wrote: “Older people already faced stealth taxes: Low interest rates, higher inflation, Quantitative Easing on annuities/income drawdown hit their income.
“The message of this Budget is – don’t bother to save for the future and if you’re too old to work anymore, you don’t count.”
The Institute of Fiscal Studies have also confirmed that people turning 65 next year will lose up to £323 with little forewarning. Labour’s shadow Chancellor Ed Balls reacted to the report stating: “It’s now even clearer that this was a Budget that asked millions to pay more so millionaires could pay less.”
And for the younger generations with longer lifespans, the Chancellor has introduced an automatic review to make sure retirement keeps with the pace of mortality. A 21 year old, emerging this summer from university will need to keep that steam up until they are 75, while a 2012 baby may see the prospect of retirement only 80 years later in 2092.