Chancellor’s budget leaving retirement to chance

Britain’s biggest pensioner organisation, the National Pensioners Convention (NPC) believes the Chancellor’s real intention arising from today’s Budget statement is to place further responsibility for retirement onto individuals and the market, rather than seeing it as a role for the government.

Dot Gibson, NPC general secretary said: “Pensioners will be concerned that benefits such as the winter fuel allowance, cold weather payments and the Christmas Bonus have all been placed into the welfare cap, which could lead to cuts in the future, at a time when fuel bills in particular are continuing to rise.

“The announcements regarding a new Pensioner Bond and changes to ISAs were also rather rose tinted. 55 per cent of all pensioners receive less than £10 from their savings and 29 per cent of older couples have less than £1500 put aside.

“The idea that older people therefore have huge amounts of money to invest is rather optimistic, but the most serious change was related to defined contribution pensions. These reveal that more has to be done to improve the prospects for future pensioners.

“The state pension is one of the worst in Europe and the high water mark of decent company pensions has long gone. Allowing people to take all their pension pots however doesn’t make the pot any bigger and belies the fact that the average worker will have a pension pot of little more than £30,000 to cover all of their retirement.

“Enabling people to take their pensions from aged 55 also shows the chancellor has realised there is a huge problem coming down the line which has to be funded. His plans to raise the state pension age to 68 will create an army of older workers, who if lose their jobs in their late fifties will be unable to find work.

“The only way they will have to fund this period of limbo until they reach retirement age will be to use their pensions – which might solve the problem in the short term but will store up bigger problems later on when their money starts to run out. Once again it’s a pensions fiddle and those left to carry the burden will be some of the lowest paid workers.

“The reality is money purchase defined contribution pension schemes are simply not the answer to funding a decent income in retirement. The private pensions industry might make a killing from the schemes but most workers end up with much less than they thought.”