The chancellor has been criticised for not providing targeted help for pensioners in today’s Spring statement.
Pensioners, as well as lower-income households, are disproportionately affected by rising inflation rates and are now facing soaring energy bills. In addition, pensions will only receive a 3.1 per cent state pension rise in April, after the government decided to temporarily remove the triple lock. But inflation figures published today show that prices are now rising at 6.2 per cent a year – with the OBR forecasting that this will rise to 7.4 per cent this year.
LCP partner and former pensions minister Steve Webb says: “I know I’m more interested in the position of pensioners than some, but I’m genuinely shocked that the Chancellor has done nothing at all for pensioners for whom fuel bills make a large part of their budgets and face hikes in bills with no additional help.”
Quilter head of retirement policy Jon Greer says: “Sunak was never going to please everyone, however what he has unveiled today is unlikely to keep pensioners in the black in the immediate term. Most probably won’t have already been planning to install solar panels and heat pumps and many older people either don’t drive or only take short journeys, meaning the cut on fuel duty is unlikely to offer a helping hand.”
In addition, Sunak’s flagship announcement of a £3,000 rise to the National Insurance (NI) threshold rise won’t help pensioners because they don’t pay NI on earned income.
Greer adds: “Over 55s may now look to take advantage of pension freedoms to make ends meet in the absence of any help coming from the Chancellor. The OBR has significantly increased its estimates of how much people will draw from their pension. It now expects receipts to be up £1.7bn as people clamour to use their pension savings just to make ends meet during this cost-of-living crisis.”
“The Chancellor also announced a cut in the basic rate of income tax from 20 per cent to 19 per cent from April 2024, just in time for the next election. This will be of benefit to pensioners, who pay income tax on earnings or pension benefits, but do not pay any national insurance contributions. As a result, those approaching retirement should if at all possible not forgo pension contributions as putting money into a pension today means you get higher tax relief than when you take it out in a years’ time (20 per cent vs 19 per cent).”
The government has however, reaffirmed its support for triple lock.
Hymans Robertson partner Chris Noon says: “The triple-lock used to increase state pension is an important long-term protection for pensioners. Too many pensioners continue to live on incomes below the pensioner poverty, which in tandem with the increasing inflation rise, are leading to increasing worry for many. The Covid pandemic and the arrival of furlough led to a one-year anomaly, which we are pleased to learn the government has confirmed will end next year.
“This was a short-term technical issue and it is welcome news that the Government has not been persuaded to throw out the triple lock completely. The UK already has one of the worst state pensions across the OECD – throwing out the triple-lock would have risked pushing more pensioners into poverty, which combined with a current worrying economic crisis would have been disastrous for many.”
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