Better off old
People in their 60s and 70s have benefited most from economic growth over the
last thirty years while younger adults and families with children have seen
their incomes fall. A new study of the economic circumstances of pensioners,
families with children, and childless working adults shows that older people
have seen rates of poverty falling from about almost one in three pensioner
households in 1979 to fewer than one in seven now. On the other hand relative
poverty among working age adults with and without children has grown.
Source: IFS from Family Expenditure and Family Resources Surveys, DWP
Pensioners have been protected in several ways. More get good pensions from
their job – related to their salary and protected against inflation. A growing
number own their home outright – cutting housing costs – and pensioner benefits
have been increased by more than benefits for younger people. The figures are
averages and many people over pension age, of course, are poor and feel it. But
as a group the Institute for Fiscal Studies research says “The face of poverty
has become substantially younger during recent decades.”
Pensioner benefits under threat
The promise made by David Cameron before the 2010 election that pensioner
benefits were safe will not survive the next due in 2015. A new cap on the total
cost of benefits will include all pensioner benefits except the basic state
pension itself. So the cost of pension credit and help with rent and council tax
paid to pensioners could all be squeezed to keep total spending below the cap.
The Coalition has also said the ‘triple lock’ increase in the state pension may
not last beyond the 2015 election and may not even form part of the Liberal
Democrat manifesto according to Pensions Minister Steve Webb. The triple lock
ensures the basic state pension will increase by the rise in prices, wages, or
2.5% whichever is the highest.
Labour has said it would take the Winter Fuel Payment away from 600,000 people
over pension age whose income is high enough to pay tax at 40% or more.
Currently that means an individual income over £41,450. The payment would be
removed from individuals – so a married couple where one partner had an income
above that level and the other didn’t would keep half the payment. Labour would
also stick to existing spending plans in 2015/16 which implies it would not
reverse changes planned by the Coalition.
Winter fuel payment restricted
Older people living in seven EU countries will no longer be able to claim or
receive the Winter Fuel Payment from the winter of 2015/16. At the moment anyone
entitled to the benefit in the UK can have it paid if they move anywhere in the
European Economic Area (the EU plus Iceland, Liechtenstein, and Norway) and
Switzerland. And since last year anyone living in those countries who has lived
and worked in the UK and has a strong connection to it can claim the payment
once they are old enough - born 5 January 1952 or earlier for this winter. But
the Government has decided to add a temperature test that will exclude countries
where the average winter temperature is higher than that in the warmest part of
the UK - south west England. Seven countries will be excluded – Cyprus, France,
Gibraltar, Greece, Malta, Portugal, and Spain. From 2015/16 ex-pats in those
countries will lose the payment and not be able to claim it. But 500 UK
pensioners in Croatia, which joined the EU on 1 July, can now claim the Winter
Fuel Payment.
Scamwatch
Not all scams are online. VH wrote to me about a letter she had received. Over
two effusive sides of paper it said things like “it is INDISPUTABLE. You have
indeed won the 1st prize of £45,244,42! This cheque is ready for you.
It bears your name and has been signed by the Finance Department.” The prize was
mentioned several times but the small print told a different story. In order to
get the money VH had to enter into a prize draw either by answering a very
simple question or buying products from the firm – which was in fact a
foreign-based mail order company.
VH did not believe the letter but “weary of receiving communications from
several companies advising me that I have won large sums of money…I carefully
filled one in and returned it. Needless to say I have not received a cheque.”
She was right to believe that she had not won money, but wrong to return the
form. By doing so she moved her details from a ‘cold’ list of names and
addresses harvested from public information to a ‘warm’ list of people who
really exist and were just a little bit tempted. Simply by replying her details
gained a value and will be sold on. I fear VH has had a lot more missives.
If you get a letter offering you a prize in a competition you have not entered
or for doing something simple there is one sure way to be a winner. Shred it,
burn it, or tear it into small pieces and put it in the bin. That way no-one
will turn your details into a marketable commodity.
Austen 10?
After Sir Mervyn King’s announcement that Winston Churchill would feature on the
new fiver (see Money News July) he has responded to criticism that no banknote
would then feature a woman (apart from the Queen). He told MPs that Jane Austen
is ‘waiting in the wings’ to replace Charles Darwin when the tenner is reissued.