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Pensioners have never had it so good, says IFS
More than 40% of pensioners are in the top half of the income scale compared with just 25% 20 years ago, according to the IFS.
by Michelle McGagh on Jun 29, 2012 at 12:02
Rich pensioners who have enjoyed the fastest-rising incomes over the past decade should contribute more to their own long-term care costs, according to a new report.
Although there has been little in the way of good news for pensioners this year, with low interest and annuity rates and poor investment returns hitting them hard, a report from the Institute of Fiscal Studies claims they shoulder less of a burden than working people.
One of the key factors for retirees' strong position is the increase in their income over the past 10 years. Since 1999 pensioner income has risen 29.4%, while non-pensioners have seen a rise of 26%.
More than 40% of pensioners are in the top half of the income scale compared with just 25% 20 years ago.
Pensioners have benefited from boosted state and private pensions and Labour benefit changes, but have not had to bear the brunt of coalition cuts and tax increases; despite the ‘granny tax’ brought in as part of the March Budget, pensioners still lose out less than working-age households.
In the paper, Pensioners and the tax and benefit system, the IFS said that means-testing fuel allowances and free TV licences would bring in £1.4 billion a year.
It also recommends scrapping the 25% tax-free lump sum pensioners can take on retirement, which would raise £2.5 billion a year, and said other areas should be looked at, including the fact that pensioners pay no national insurance and the forgiveness of capital gains tax on death.
The IFS said these savings could be used to fund long-term care for the elderly, as set out by the Dilnot Commission.
Paul Johnson, IFS director and co-author of the report, said: ‘Should government choose, there are ways of raising money to pay for the changes from relatively well-off pensioners, the group which will benefit most from the [Dilnot] proposals.’
However, Malcolm McLean of consultancy firm Barnett Waddingham was wary of using statistical averages.
‘There is no doubt there are many comfortably off pensioners at the present time who are benefitting from the proceed of generous final salary schemes… But there are also many more who are certainly not in that position and are bumping along at or only slightly above the poverty line.
‘Membership of expensive golf club and three foreign holidays a year is definitely not how they spend their time – rather it is a continual struggle how to feed and clothe themselves and heat their homes.’
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by Michelle McGagh on Dec 17, 2014 at 08:00