Wednesday, 28 March 2012

The ‘Decent Middle Class Pensioners’ Are Being Squeezed Too!

Today in the Financial Times, columnist John Kay has written an article entitled: ‘My generation should repay its good luck’. It argues that to oppose the so-called ‘Granny Tax’ was to ‘aggressively pursue our own interests at the expense of our children and grandchildren: a bizarre paradox of perverse collective action’.

Similarly – although in the event, Mark Ferguson’s article for LabourList on ‘Squeezed Youth’ didn’t even mention pensioners – his advertising tweet echoed John Kay’s sentiments:
“The baby-boomers have sold the family silver – leaving young people with the scraps.”

It is an accusation regularly – and increasingly – aimed at the 60+s. They are the generation who ‘had it all’, but are now bequeathing a world of global warming, sovereign debt, youth unemployment, unaffordable housing, tuition fees and AIDS.
And – as if to plunge the knife even deeper – they are living interminably long, a social, financial and medical burden upon the less-numerous, ‘squeezed youth’.
The day after the budget, the newspapers were full of anger at the ‘granny tax’ on ‘decent middle class pensioners’ … but even then, there were voices pointing out that, overall, ‘the old’ had suffered less under austerity than other groups:
“Screw the ‘decent middle class pensioners’ they'll just have to get in the lifeboats with the rest of us,” tweeted one disability campaigner.

Perhaps, however, we need to careful before we write off the aged as the ‘privileged’ generation for whom we are all suffering.

Strangely, I couldn’t give a fig about the ‘granny tax’. Although it is indeed the removal of a preferential allowance, little has been taken from pensioners – all that has happened is that the basic threshold is rising to meet the Age Related Allowance. When it all works itself out, it will mean a cut of £1 a week for pensioners earning £4,500 pa over and above their pension. Chicken feed.

Much worse things have been, and are happening, to pensioners.

When the recession hit, the government reduced the base rate to unprecedented levels, thereby slashing the income-from-interest that many pensioners had factored into their retirement plan. Interest rates on ‘safe’ investments now fail even to keep up with inflation, so pensioners are seeing their capital sum diminishing too. Since this happened at the very start of the recession, and since middle-class pensioners tend to adjust rather than riot, it has gone largely unnoticed.

Those retired people who had been building up their capital in their homes found themselves doubly hit. A lot is said about how the ‘baby-boomer’ generation are ‘sitting on’ large family houses which their children cannot afford to buy; but looked at from the other perspective, the older generation sees itself rattling round in unsuitably-large houses which it bought as a nest-egg, but which are now unsaleable.

Young people see a generation with ‘savings’ – something they can only dream about. What they forget is that they still have decades of earning-power ahead of them. What a pensioner has saved, has to last – an indeterminate and indeterminable period of time – and there is no more earning, only spending, from now till death.

For those approaching retirement, the world is an increasingly scary place. Equitable Life, of course, collapsed long ago, but endowment policies have all come in way below expectations, and private annuities are yielding less and less as the economy stumbles and base rate remains minimal. Meanwhile, the ‘favoured’ public sector workers on their ‘gold-plated’ pensions have already had one knock-back, are tagged to CPI not RPI, and are currently facing a second revision of payments and yields.

Much has been made of this year’s ‘biggest ever’ rise in pension (£5.30) – indeed, it is more than double the rate of increase in average earnings. But it still falls shy of inflation (RPI) … and at the end of the day, percentages hide absolutes, don’t they – how far does £5 go nowadays?
Gas and electricity costs are spiralling when pensioners are the people most likely to be in all day and to need the heating on. The cost of food is rising when it forms a disproportionately large proportion of a pensioner’s budget. And (on a personal note) petrol costs are rocketing when they are the ones expected to flit round the country visiting numerous grandchildren!

‘Crying the poor tale’ doesn’t come easily to the older generation, and I’m certainly not trying to make a case for preferential treatment. Moreover, any decent grandparent HAS to be terrified for their grandchildren’s prospects (as Mark Ferguson’s article so eloquently pointed out).
But we need to remember that ‘divide and rule’ is a Tory trick – to set the worker against the unemployed, the taxpayer against the disabled, the employer against the unions … and the young against the old.

Labour’s task, by contrast, must be consensual – to unite all those of us who are suffering under this incompetent and kleptocratic government.
And to get rid of them in 2015.


  1. Good article on how Labour should act for older people:

  2. In another Guardian article, Peter Wilby continues the myth of the 'lucky generation' who have profited at the expense of the young - - whilst rehearsing much of the evidence that they have not!