“Pension Cuts on the Way”

Either I must be psychic, which I doubt, or the Prime Minister, the Secretary of State for Works and Pensions – Mr Ian Duncan-Smith and just about the whole of the Conservative Party, and the Editor of The Times, must be reading my GrumbleSmiles blog.   None of this can be true !

So it must be just a remarkable coincidence that only hours after I wrote two blogs on the £140 Pension (click on “NOW YOU SEE IT” and “NOW YOU DON’T” or find “A WEALTH LADDER” in TAG CLOUD).   There before your very eyes on the front page of The Times is a headline “PENSIONERS BENEFIT CUT”.

The softening up process has just begun.   We are being sounded out about cuts to pensioners’ allowances.

The £10 Christmas bonus – a bribe by Gordon Brown many years ago when £10 meant something.   Easy to give but harder to take away than Chicken Chow Mein.   All pensioners get it in their state pension, but it is certain to be the first disappearing trick.

  • Winter Fuel Allowances

This costs £2.2 billion a year and is worth between £100 and £300 to pensioner households, dependant on age and the number of pensioners in the house.   Six million pensioners live in fuel poverty and with energy costs rising rapidly, this is a very important benefit to the 1.7 million living below the poverty line.

It is paid with the universal pension so it has a high take up, which is why it is tantalisingly important to the Chancellor of the Exchequer to claw back.

  • The Cold Weather Payments

Both Winter Fuel Allowances and Cold Weather Payments are almost certain to go in a snow flurry of talk about global warming.   They are a Godsend to pensioners living in fuel poverty, but will hardly be missed by wealthier pensioners or those living in Spain who also get them.   They are harder to claw back, because means testing more people would be expensive so they are most likely to go altogether and be used to pay toward a higher universal pension.

  • Free Bus Pass

No loss to wealthier pensioners who probably do not use buses anyway, but a real loss of opportunity to the poorest which will significantly increase social isolation.

  • Free T V Licences

Again makes no sense to give these to wealthier pensioners but an extremely emotive issue to withdraw.    Possibly could be clawed back in future and lost in the muddle of free internet access to T V Programmes.

Ironically the recent argument about removing child benefit from higher paid parents paves the way for the same argument to be deployed in relation to their being no justification for wealthier pensioners receiving welfare payments beyond the universal state pension.   The problem for the Government is not whether to do it, it is just about when and how.

The how is answered by introducing the magic of £140 universal pension (soon to be £155).  Except, soon means no earlier than 2015 and it may well not apply to existing pensioners, only people who reach retirement age after 2015.

Just to add fog and confusion to the arguement, different figures are used by a variety of politicians in the same party.   The new magic pension is £140 or £155 or £160 and will be paid any time from 2015 to 2016 t0 2017.

The cuts are definitely coming but will be offset by a higher basic pension.   The power of the grey vote may just allow existing pensioners to escape the cuts, but it will be a close call.  None the less they certainly will not likely be any better off.

                          There’s the £140 Pension Illusion !

This entry was posted in ELDERLY UK POLICY, Pensions and tagged , . Bookmark the permalink.

3 Responses to “Pension Cuts on the Way”

  1. As one may say the devil is in the detail! Todays paper a CAP at £75k for health care provisions? I wonder.
    All the bits and pieces noted above being chieselled off the more frugal and prudent pensioners who may have taken some advice for old age? this is small comfort.
    With the pension funds and future and existing pensioners recieving what the econonmic market will allocate, at now an age of 70+ , Where are the joys of retiring? If any.
    Existing pensioners who have property-single surving pensioner! (The normal house valued at maybe £160K) and are in care, have with say the pensionable income total of (£5500 state pension plus an employment pension giving a total of £18.5K) at costs of £28.5K for basic residential care gives a difference of some £10Kto be found per year giving from the £160K a total of [£160K-£23.5K( the present cap before benifits) a maximum life expectancy on self support care of some 13 years- retiring at 70 this is a life expectancy of 83, assumming one is not on care at the point of retirement.
    Should the care cap be increased to £75K? then [£200K (current property prices)- and income of what? Pension pots have fallen, investments have fallen, the stock markets is not looking healthy, and HMRC tax at the lowest level before 40% at £30K say, for a spouse and partner. this leaves £200K-30K = £170K. Assumming Care costs for residential care incease to £35K per annum then £170K/£35=4.8 years on care maximum? Retire at 70 that is 74 years. Of these years one would only recieve benifits for care of £170K -£75K – the new cap for say just over two years, if one is lucky.
    What is both partner and spouse on care at the point of retirement is the £75 nett or gross. The government wins hands down.
    The future younger generation will have no tangable assets as they may live a lifetime in rented property, so what for the future??? We must think both for ourselves and the younger generation? The Insurance/assurance industry needs to provide for this shortfall, and the governments needs to review its tax regieme to encourage savings and financial provisons for old age.

  2. It Is All Smoke and Mirrors!!! And Who exactly make up the majority of the eledgible voting populus???

  3. It is difficult to see the logic of the £75K before savings are ringfenced! It looks like a good deal, maybe a little better than today’s £23K before the state step in. However one retires at 70?
    Assets may be a property/savings of £200K minus the state support at £73K then one has £125K which one must appropriate to care charges if one becomes beholden to them.
    At a pension of £30K per annum including state pension of £145/week =Approx £8K per year then the relative monies for care assumming the costs are £35K per annum, one has to find some figure??? Assumme for aurgument that the state pension and private pension are not taxed at 25% or at all (Below (£30K)), then the cost of care is £35- (income Total- say £30K) so one has to find out of saings £5K per annum.
    This makes the costs for care frightening. One has from figures above Proerty/assets worth £200K and they are ring fenced by government at £75K then the £125 difference at £5K per annum, that means to me that £125/£5=25 years of paying from one savings for care.
    That give me
    70 years at retirement + 25 on care a total age of 95, and if one included the £75K for state benifit at £35K per annum for care minus the pension of £8K then the effective costs are £27 K per annum, this would give me on care supported by the government extra lifespan of £75/£27=2.8 years. In other words To recoup my assets and savings I would have to survive untill I am 97.8 years??? This is only if I need residential care? if I require nursing care?? Then what goes?? Who can guess?? I cannot!!!

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