Daily Express Article

by Dr. Ros Altmann

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How much bad news can decent, middle-class older generations take?

This week's Budget bombshell that abolished age-related tax allowances was aimed directly at those who have reached the end of their working life and managed to put enough by to avoid just living on the state in retirement. All over-65s with incomes between around £10,000 and £24,000 a year, will have to pay more tax, while the mega-wealthy are unaffected. They feel that the thrust of policy is to find as many ways as possible to reduce their incomes.

For them, this is just the latest in a series of measures, introduced as a result of a crisis caused by irresponsible lending and borrowing which these older generations never engaged in.

First, they lost much of their savings income as interest rates were slashed to record lows over 3 years ago. The income from the money they put by to help give them a better life in retirement has fallen significantly.

Then the policy of Quantitative Easing (QE) created high inflation, which has hit pensioners much harder than younger age groups and taken away their purchasing power. QE has also led to huge falls in annuity rates and sharp reductions in the income people can take out of income drawdown pensions, making many pensioners permanently poorer.

In addition to the cut in pensioners' Winter Fuel Payments and the decision to uprate state pensions only in line with consumer prices, instead of the higher retail price index, is it possible that these decent middle class pensioners will have their houses taken away to pay for their care in later life.

By introducing a cap of £100,000 (which would not even include the costs of accommodation in a care home), most middle class pensioners needing care could lose their lifetime's worth of saving and asset-accumulation, while the very poorest have it all paid for and the very wealthiest are protected. People don't mind paying something towards their care, but they do not want to lose everything.

The bedrock of our society is formed by the decent hard-working people now coming up to retirement, having done what society asked of them. We should value them, not take them for granted.

Dr. Ros Altmann
21 March 2012

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