Attack of the Killer Pensioners
March 22, 2012
If one were interested in the demographics to which different newspapers aim to appeal, one could do a lot worse than look at the headlines this morning. Compare and contrast:
The Daily Telegraph: ‘GRANNY TAX’ HITS 5M PENSIONERS
The Daily Mail: OSBORNE PICKS THE POCKETS OF PENSIONERS
The Times: THE 50P GAMBLER
The Guardian: PENSIONERS FUND TAX CUT
The Daily Star: COWELL & WILLIAMS BIG GAY BUST-UP
We can summarise the above thusly. The target of the ire of the right-wing press will be shared by their mostly late-middle-aged-and-middle-class audience, who have the most to lose from the Budget. Readers of the Times are still clearly clinging to their aspiration to one day earn enough to hit the top tax rate, while the Guardian is still appalled by any prospect of a tax cut when their readers in the public sector are losing their jobs, and willing to use emotive language to make that point. Readers of the Daily Star are morons.
But what are these pension proposals that have the readers of the Mail in a tizzy? There are two components:
- The removal of the higher personal tax allowance for new pensioners, and the ‘freezing’ of the allowance for existing pensioners
- Rolling the State Second Pension and the Basic State Pension into a single scheme.
Pensioners are not taxed until they earn over £10,500 at present, while everyone else starts paying tax at £8,100, rising to £9,200 next year. You earn a basic state pension by having worked for a given number of years, and have a second state pension that reflects how much you actually contributed to the Treasury during that period. If the combination of these two and any private pension went below a certain level, it was topped up with Pension Credit, with some additional top-up if you have some form of savings. Osborne wants to have a higher basic pension to get rid of what was a disincentive to save at certain points on this scale, and to reform a system so complicated that a third of pensioners did not claim their full entitlement. By raising this basic pension level to £140 a week (£7280 a year, so not liable to tax in any case), a lot of poorer pensioners will be a lot better off – especially those who did not understand how much they were entitled to.
The main losers from this will be people who built up a level of entitlements throughout their working life and are retiring now. This, broadly speaking, covers people born in 1947-1952, or, the baby boomers. If Osborne had sold this policy properly, it could’ve been very popular with the generations born after them. It’s certainly popular with me.