MONEY NEWS MARCH 2014

Retired do well; Don't click on email scams; BT charges for two 'free' services

DO RETIRED DO BETTER THAN WORKERS?

A controversial report by the Office for National Statistics says that retired people have seen their income rise over the last five years while working age people have seen their income fall.

Inevitably the figures will be used by campaigners who believe pensioners have never had it so good while many young people have, well, never had it at all.

The report looks at what is called ‘median income’ which means half the population has a higher income and half a lower one. The figures are also adjusted for the size of the household and revalued so that they are at constant 2011/12 prices. In other words no-one really has these incomes – they are just a way of making comparisons.

The figures show that middle-income households – working and retired – saw their income rise from the start of this century until the financial crisis of 2007/08 caused by the banking industry. But since that time the real incomes of middle-income working people have fallen by 6.4% in the five years 2007/08 to 2011/12 back to the level in 2001/02. But over the same period middle-income retired people saw their incomes rise by 5.1%. The conclusion many have drawn is that retired people were pretty much insulated from the effects of the financial crisis while working age people got poorer and poorer.

One reason for the difference is that unemployment rose over much of that period and those who had jobs saw their wages frozen or rising by less than inflation. Benefits for working age people have been cut and any rises have been limited recently to 1% a year. On the other hand people living mainly on state or company pensions have generally seen those grow with inflation. That averaged more than 3% over those five years. Another important factor is that the half million or so people who retire each year are generally better off than those already retired.

So these ONS figures, while important, disguise the fact that life is not rosy for many retired people. In particular, people who rely on the income from savings have seen that slashed to a fraction of what it used to be worth. And overall the median income of retired households is still well below the income of those in work. In 2011/12 retired people had three quarters of the income of those in work - £6,418 a year less.

The figures also do not reflect the incomes of the three million pensioners living on means-tested pension credit – and the one and a half million more who live below the poverty line because they do not claim what they could.

Despite those shortcomings they will be used by campaigners who believe older people should take an explicit share of the austerity measures. That is going to be one of the key battlegrounds in the months ahead to the General Election on May 7, 2015.

SCAMWATCH
Confession time: I clicked on a link on an email that was a scam. I tell people never to do that but just after I had cancelled my 1571 service (see above!) I got an email from BT about changes to my account and I just clicked. Luckily my virus protection software is up to date and it blocked the link and warned me not to proceed. Phew! But it made me realise just how easy it is to do – even for someone who warns about scams every month!

Another recent email appears to come from PayPal. ‘New Year, New Regulation’ it is breezily headed and blames the EU for new rules that mean your account is restricted until you click on a link to confirm your details. it uses the PayPal logo and is looks genuine, though close examination reveals it fails to get the © symbol right and spells ‘service’ without a ‘v’. Analysis of the clickable link (don’t try this yourself) shows that it does not take you to paypal.co.uk but to a different site in an unknown country where they will collect the details you input and scam you later. People often ask ‘how do they know I have an account?’ They don’t. They just send them to everyone and the 10 million BT customers or the 18 million PayPal users will think it is for them. Genuine emails from firms should address you by name or give part of your postcode. But treat even those with caution.

RINGING FOR CHANGES
BT has started to charge £1.75 a month (£5.25 on quarterly bill) for its 1571 answering service and the same again for its Privacy service which display callers’ numbers and helps customers block calls. BT sent the information about these changes in the Update magazine sent with bills late in 2013. But if you missed it you will be paying for something that you thought was free.

If so it is simple to opt out. Go to bt.com/myfeatures and put in your phone number and postcode. It will show you what extra services you are paying for. You can cancel them on the page. But if you call 151 you can talk to someone and ask them to backdate the cancellation to January 4, 2014 as you did not see the information BT sent.

If you want to see who is calling before you answer the phone you can get the Privacy service free for a year if you agree to stick with BT for 12 months. After that some of BT’s landline competitors – including TalkTalk and Sky – already offer this service free and that will put pressure on BT to fall into line in future.

BUDGET WATCH: The Chancellor’s annual Budget is on 19 March. Watch for: pre-election giveaways. Watch out for: subtle ways of taking that money back. The Government will announce the level of the overall cap on the cost of social security benefits but it will not include the cost of the state pension.

e-mail Paul Lewis on paul@paullewis.co.uk