IT has been said that pensioners have never had it so good and their grandchildren have never had it so bad and there is some truth in the idea. In recent years, young people have struggled with the rising cost of living, flat or falling wages and the unaffordability of mortgages. Their grandparents on the other hand have seen their household incomes increase by around 19 per cent over the last ten years – in Scotland, they have also received universal benefits such as the winter fuel allowance and free bus travel. So yes: in many ways, it is true pensioners are in a much better financial position than young people.
However, in acknowledging there has been some improvement in the incomes of pensioners, we should not forget that pensioner poverty is still a reality and some new research has identified the extent of it. According to study by Homewise, one in three over-60s say they struggle to make ends meet. Many have had to borrow money from friends or family, some have had to sell some of their possessions or turn down the heating; and some have had to make the terrible decision to eat less to make ends meet.
That this is happening in a rich economy like the UK’s is shocking enough, but the worry is that the circumstances for pensioners are about to get even worse. Even before the vote for Brexit, the prospects for pensions were far from rosy. Two years ago, the then Chancellor George Osborne swept away the old pension regime which required people to buy an annuity and replaced it with a new system that gives savers greater choice, including the right to take their pension as cash. We were told the aim was to give pensioners more freedom, but the danger is that pensioners will use the new freedoms to make decisions that will leave them worse off. In the worst case scenario, the reforms have the making of another PPI scandal.
And then, to make matters worse, came the EU referendum and the economic fallout which last week left the Bank of England with no alternative but to cut interest rates to a record low of 0.25 per cent. The Bank was only making the best of a bad situation but for pensioners it means that after years of being told to save as much as they could for their retirement, the return on those savings is now virtually zero. The cut in interest rates has also ratcheted up the cost of pension scheme promises and put pressure on already bloated deficits on final salary schemes. They are at £935billion at the moment but that could easily go past the £1trillion mark before long.
The irony of it all is that it was pensioners who voted in great numbers for Brexit in the first place, but it is the reckless Brexiteer politicians who deserve the blame rather than pensioners. Sadly, the uncertainty is likely to drag on for years, and there is every chance pensioners will face the double whammy of rising inflation too. Another concern is that the UK Government will respond to the crisis by allowing a reduction in the benefits on final salary pension schemes but that would be the wrong path to take. Many pensioners are feeling the financial pressure after Brexit - the UK Government’s job is to protect them by doing all it can to protect the integrity of the pension system.
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