Telegraph blog – Time for Government to take plight of pensioners more seriously

by Dr. Ros Altmann

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Figures just released by the Institute for Fiscal Studies (IFS) are yet more bad news for pensioners. They show that the Government’s deficit reduction measures will reduce pensioner incomes by an average of £240 this year (around £5 a week) and by a further £367 (£7 a week) in 2012.

Pensioners have already been hit hard by the recent economic crisis. They are suffering the double blow of extremely low interest rates and very high inflation, which means that the value of their savings is being eroded, as the income they receive is less than the inflation rate they face.

This is compounded by the latest rise in VAT, on top of further pain due to rising food, clothing, petrol and heating bills.

Ultra low interest rates have also hit annuity rates hard, so recent retirees will receive a much lower pension for the rest of their life.

How much pain do pensioners have to endure? The next blow will be benefit cuts, which will reduce payments to the poorest pensioners. Even people not yet retired will suffer as the state pension age rises. Many women have planned their retirement very carefully and had already accepted a sharp increase in their state pension age. However, these same women have been hit again and over 500,000 will see their pension age rising for a second time by over one year, with many losing up to two years of state pension, and all the associated pensioner benefits.

While the Government talks of fairness, the pensioner population is being squeezed time and again. Money is being taken away from older savers and pensioners and transferred to younger borrowers – and bankers. Borrowers’ debts have been devalued and banks are being allowed to make huge profits by widening their lending margins. How is this fair?

It is about time the Government took the plight of pensioners more seriously. They have no way of making up their income losses in future. At the very least, Government needs to bring back inflation-linked National Savings accounts for older savers, so they can safely protect their capital from the ravages of inflation.

The IFS analysis is yet more evidence that older people are being forced to pay the price of correcting the economic imbalances created by others. With an ageing population, this could have serious negative consequences for all of us.