Author Archives: Sally West

At the start of this week I told colleagues at Age UK that year’s Budget was unlikely to have much specifically for older people – either good or bad. But I was wrong! Headlines the next day included phrases such as ‘pensioners robbed’ and ‘anger as pensioners suffer’.

Disingenuously changes to allowances for people aged 65 and over were not described as a tax increases but ‘simplification’. So what is the effect? Well freezing the age allowances and abolishing them for those reaching 65 from April 2013 will result in 4.4 million people losing an average of £83 in real terms in 2013-14, of whom 360,000 will lose £285. 

These changes do not affect the poorest – over half of older people have incomes too low to pay income tax. But nor do they impact on the most wealthy older people who do not receive the higher allowances. Those affected will be older people who have built up private pensions and savings but still have only modest incomes. They will have a particular effect on people reaching 65 soon after April 2013 who may be planning their finances on the basis of a higher tax allowance and have little time to make changes.  Despite all you may hear about those reaching retirement now being the lucky generation with great final salary pensions, the median (typical) income of a newly retired pensioner is in the region of £11,000. 

As George Osborne points out, older people will gain from a £5.30 increase in the basic state pension and Age UK supports changes to the uprating of the basic state pension.  But many older people on modest incomes have other concerns – for example high energy bills, low rates of savings interest and reduced access to services.

Following the waves of protests about these changes to age allowances some commentators have argued that this balances things up a bit as in general pensioners have been protected from cuts, but at Age UK we worry about pitting one generation against another. In many respects there is more inequality within age groups than between them. Each generation faces different challenges and we need systems that are fair within and across age groups. And reductions in support or increase in taxes need to be debated – not announced without full consultation and described as simplification.  

Read Age UK’s full Budget briefing

Find out what the Budget means for you