GrumbleSmiles

Continued from two previous posts.

In making his New Year announcement on maintaining the pension triplelock until 2020, the Prime Minister said it was a choice based on his values – “I want people, when they reach retirement, to know they can have dignity and security in their old age”.

He obviously has not been out much lately.  Certainly not to the NHS with hospitals overflowing with older people.  Nor to Social Services, overwhelmed by demands for domiciliary care they can no longer afford.  Definitely not to the many thousands of isolated older people, lonely and cold in their own homes in the community.

Meanwhile, the very next day, his Chancellor unravels the Prime Minister’s promise by saying that major cuts are still to come in the welfare benefits budget, which will hit the lest well off pensioners hardest.  At the same time, Iain Duncan Smith, the Work and Pensions Secretary, added that he wanted to remove the entitlement to winter fuel allowances, free bus passes and free TV licenses for better off pensioners.

There won’t be quite so much dignity and security left when all this double talk about the triplelock has finished.

The “Triplelock” was introduced in 2010 and intended to give reassurance to pensioners about their income from the State.  It links annual state pension increases to the highest of inflation, average wage increases or 2.5%.

Sounds simple enough, but everything is not quite what it seems.

Inflation used to be defined as R.P.I – the Retail Price Index.  Then it got changed to C.P.I. – the Consumer Price Index which somehow ended up lower than R.P.I. That’s the first of the triplelocks unlocked.

Wages since 2010 have been held down by Government austerity measures – unless you are a banker or politician.  That’s the second of the triplelocks unlocked.

So that just leaves the 2.5% which is a number that can’t be changed – unless we erode pensioners’ savings, dramatically reduce the value of annuities and eliminate final salary pensions.  That’s the third triplelock unlocked.

Hey Presto! Politicians promises

David Cameron has suddenly rediscovered pensioners.  In his New Year’s resolutions for 2014, he has announced a vote-catching promise to extend the triplelock on pension increases for the life of the next Parliament.    Sounds good  ?????

In Daily Mail speak that translates to a headline grabbing:-

£1000 a year by 2020

Sounds almost too good to be true – so let’s work it out.  From April 2014 the basic state pension is £113.10 per week:-

• plus 2.5% in 2015 = 115.93
• plus 2.5% in 2016 = 118.82
• plus 2.5% in 2017 = 121.80
• plus 2.5% in 2018 = 124.84
• plus 2.5% in 2019 = 127.96
• plus 2.5% in 2020 = 131.16

A bit of a slow burn promise and of course it only applies if the conservatives are re-elected in the 2015 general election.   Oh and not in Scotland if you vote for Independence.

Still, an extra £20 per week is not to be sneezed at, even if you catch a cold with energy prices rising by 10% a year.  The good news is that the other political parties are likely to follow Mr Cameron’s lead rather than risk losing 12 million pensioners’ votes.   If that happens, we will be back at square one with nothing much to choose between the political parties as far as pensions are concerned.

Meanwhile:-

• Hospitals are filling up with older people;
• Domiciliary care has all but disappeared;
• Savings rates remain at zero;
• Energy and food costs keep rising.

So That’s Alright Then!