Age UK response to the Autumn Statement 2012
Published on 05 December 2012 02:30 PM
George Osborne, the Chancellor of the Exchequer, gave his Autumn Statement to the Commons on Wednesday, against a backdrop of bleak growth figures.
But what do his announcements mean for older people? The Chancellor's new initiatives didn't cover many of the hoped-for areas, but here's a short summary of what he did announce and our response from Michelle Mitchell, Age UK's Charity Director General.
On state pensions and benefits
The Government has made a commitment to increase the basic state pension by the triple guarantee - that is the highest of increases in earnings, prices or 2.5% - taking the basic state pension from £107.45 to £110.15.
As price inflation last September's CPI was 2.2% the Chancellor has confirmed that the basic state pension will be uprated by 2.5% in April 2013.
Most working age benefits and tax credits - excluding those for disability and caring - will only be uprated by 1% for the next 3 years. However the Chancellor said that ‘other benefits, including the Additional State Pension, and those specifically for disability and carers' will continue to be uprated in line with prices.
Age UK response
'At a time when there has been pressure on spending it's a relief that the triple guarantee is in place for the basic state pension and that there will be inflation linked increases for the additional state pension and disability benefits.
'However those reliant on benefits under state pension age - including people approaching retirement who are on Jobseeker's Allowance and unable to find work - will be hard hit by the 1% increase.'
On social care
We know that care system is already on the verge of collapse, but George Osborne failed to announce any new funding to help support older people.
Age UK response
'While it's reassuring that the National Health Service budget has been protected from the cuts falling on other areas of government spending, unless funding for social care is urgently addressed then the knock on costs to the NHS will continue to grow.
'We already see hospitals under severe pressure because of a lack of community and social care services for older people who are left to struggle to cope without the vital support they need.
'The Chancellor's announcement that, in 2 years' time, councils will have to cut another 2% from their budgets is likely to lead to more cuts to frontline care and support services that are already in many cases stripped to the bone.
'Allowing the social care system to limp along leaving too many older people isolated and afraid of what tomorrow might bring, is not only morally questionable but makes no financial sense.'
On changes to pension tax allowances
The Chancellor announced proposals to cut the lifetime and annual pension tax relief allowances from £50k to £40k - affecting only 1% of the population.
Age UK's response
'We believe there need to be fairer tax incentives to encourage people on modest incomes to save for a pension.
'So we would like to see some of the savings made from reducing the annual and lifetime allowances to be used to encourage people on lower incomes to save.
'It's disappointing that the Chancellor hasn't used these changes as more of an opportunity to take a broader look at how to reward people for saving in a pension and better provide for their later life.
'A number of people already in retirement have contacted us about the rules for ‘income drawdown' and we welcome the change announced in the statement.
'The tax laws allow pension savers to draw income directly from their pension fund (‘income drawdown'), within limits designed to stop people running out of money.
'The limit used to be that the maximum you could draw was 120% of the amount you could have had with an annuity, but the government had previously reduced this to 100%.
'This caused hardship among people who had already retired and were using income drawdown. The Government has therefore said it will return to the original limit of 120%.'
For the full Age UK response, download our briefing (PDF 33KB)
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