Pensioners losing out due to Osborne budget

teajug

Found this on another site and find it worrying if this continues pensioners in UK will be the poorest in EU.

There will be many taxpaying pensioners who do not realise that in his last two Budgets George Osborne (Chancellor) has almost completely removed the increased differential between the Personal Allowance (PA)_for ordinary taxpayers and that applicable to retired taxpayers, the Age Related Personal Allowance (ARPA). This differential was enhanced by Gordon Brown to re-establish a fairer link between the increased earnings of ordinary taxpayers and the income of pensioners, which had seriously lagged behind for many years. At the same time he re-introduced the link between earnings and pensions so that pensioner’s incomes never again should fall so far behind the rest of the earning population.

In FY 2007-08 the PA was £5225 and ARPA was £7550
In FY 2008-09 the PA was £6035 and ARPA was £9030, increases of £810 and £1480, respectively.
In FY 2009-10 the PA was £6475 and ARPA was £9490, increases of £440 and £460, respectively.
In FY 2010-11 there were no increases for anyone as the CPI/RPI were both negative figures.
In FY 2011-12, starting on 6th April 2011, the PA will be increased by £1000 to £7475 and the ARPA will be increased by £450 to £9940.

The different "rate" of increase in Personal Allowances between earning and pensioner taxpayers, announced by Osborne in his 2010 budget statement, is perverse, unjustifiable and DISCRIMINATORY.

The Personal Allowance (PA) for ordinary taxpayers shortly will increase by £550 more than that for taxpaying pensioners and thus, from the start of tax year 2011-12 (April 2011) pensioner taxpayers will be paying proportionally more tax than earning taxpayers, by having less Tax Free income.

In his budget speech last week Osborne announced a further increase of £630 in the year 2011-13 taking the PA to £8105. At the same time taxpaying pensioners with an Age Related Personal Allowance (ARPA) of £9490 had NO INCREASE ANNOUNCED.

The announcement that pensioners would have their Basic State Pensions increased annually by a minimum of 2.5% or in line with RPI, whichever was higher (with additional pensions and other non-state pensions being increased by CPI) is a whitewash. He is giving pensioners a guarantee of more annual percentage increase but will be taxing them at a different rate AND, by diminishing their tax free allowances, WILL BE TAKING MORE TAX FROM THEM.

IT IS BEING DONE IN AN UNDERHAND AND GROSSLY UNFAIR, ALMOST OBSCENE FASHION WHICH PROBABLY HAS NOT BEEN NOTICED BY MORE THAN A FEW PENSIONERS.

PENSIONERS, MANY OF WHOM ARE LIVING ON A FIXED INCOME, GREATLY DIMINISHED BY THE POOR PERFORMANCE OF ANY INVESTMENTS OR SAVINGS THEY MAY HAVE ACCUMULATED IN THEIR WHOLE WORKING LIFE, DURING WHICH THEY HAVE BEEN CAREFUL AND FRUGAL, ARE NOW BEING DOUBLY PUNISHED BY THE STATE, WHICH NOT ONLY TAKES AWAY THEIR LATEST INCREASES BUT WHICH NOW HEAVILY GOVERNS AND CONTROLS THEIR ANNUAL INCREASES BY LEGISLATION.

In a nutshell, as a result of Osborne's last two budgets, the necessary gains made by pensioners have been wipe out and show that since 2008 the ARPA has increased by a "paltry" £140 (2008-2011) while the PA has increased by a "massive" £2550, a difference of £2410. The increase announced for PA for 2012-13 in last week's budget will increase this difference further to £3040.

In my opinion, the amount of tax free pay/unearned income that ANY taxpayer should be allowed to receive BEFORE starting to pay tax SHOULD BE IDENTICAL, irrespective of their working or retired status.

Additionally, the State Pension is now classed as, referred to as and in all respects is regarded as a STATE BENEFIT yet, unlike most other Benefits, is taxed.

The Chancellor's announcement that the new single rate State Pension (of about £140) being looked at in detail at the moment, will only "benefit" those who are not already in receipt of the State Pension, sounds alarm bells in my head. ANY NEW SYSTEM BEING INTRODUCED MUST NOT AND SHOULD NOT DISCRIMINATE BETWEEN PENSIONERS, IRRESPECTIVE OF HOW LONG THEY HAVE BEEN IN RECEIPT OF THEIR PENSIONS. THE INTRODUCTION OF ANY SUCH "NEW" SYSTEM MUST BE A TOTALLY FAIR AND SIMPLE SYSTEM FOR ALL TO UNDERSTAND, NOT JUST THOSE WHO ARE ABOUT TO "BENEFIT" FROM ITS INTRODUCTION. NOBODY ALREADY IN RECEIPT OF THE STATE PENSION SHOULD RECEIVE LESS THAN SOMEONE WHO IS JUST ABOUT TO QUALIFY AND, FROM THE DATE OF INTRODUCTION, ALL PENSIONERS SHOULD RECEIVE EQUAL VALUE RISES, PERCENTAGE OR OTHERWISE.

System

You have contradicted yourself
You cannot argue that pensioners have been adversely effected and then say that :

In my opinion, the amount of tax free pay/unearned income that ANY taxpayer should be allowed to receive BEFORE starting to pay tax SHOULD BE IDENTICAL, irrespective of their working or retired status.

The normal personal allowance has increased over and above the CPI or RPI to improve the situation for the majority of tax payers and takes lower earners out of paying tax.

The Age related allowances for over 65 and over 75 are increased by the cost of living and are only anounced when the rates are known towards the end of the financial year (That is why these allowance increases have not been set for 2012-13)

In my opinion, the info in your post is an obviously biased view of the facts and is an attempt to use statistics to support a flawed argument. This is what Labour MPs always attempt to do too.

Pennywise

The OP is also ignoring national insurance. The rate of NIC for workers has increased by 1% which pensioners are lucky to avoid. The extra 1% NIC will offset against the increased personal allowance for the average worker.

davetrousers

Losing out, not loosing.

This current trend is getting beyond a joke.

Pennywise

teajug wrote: »

NOBODY ALREADY IN RECEIPT OF THE STATE PENSION SHOULD RECEIVE LESS THAN SOMEONE WHO IS JUST ABOUT TO QUALIFY

But surely the opposite applies too - those who are going to retire in the years to come shouldn't receive less or be forced to retire later than those who have already retired! Today's pensioners should be grateful for what they have because they're the "lucky" generation compared to what today's workers will get after having to work longer!

Mikeyorks

teajug wrote: »

Found this on another site .

I'd go and put it back again ...... as it's not worth stealing.

The different "rate" of increase in Personal Allowances between earning and pensioner taxpayers, announced by Osborne in his 2010 budget statement, is perverse, unjustifiable and DISCRIMINATORY.

Total load of twaddle. You're completely ignoring the hugely above indexation rise the age related PAs attained in 08-09. And have maintained by indexation ever since

It would :

In FY 2008-09 the PA was £6035 and ARPA was £9030, increases of £810 and £1480, respectively

..... have been £210 and £1480 had not a certain Mr Brown had to add an extra £600 to the basic PA in Sept 08 to get him out of the hole excavated by the untidy abolition of the 10% tax band. The £1480 had already been put in place.

And you forget that a lot of pensioners who see the age related PA wholly clawed back to basic - because they have looked after their future and have income above £28930 - benefit by the extra £1000 in 2011-12.

teajug

Mikeyorks wrote: »

And you forget that a lot of pensioners who see the age related PA wholly clawed back to basic - because they have looked after their future and have income above £28930 - benefit by the extra £1000 in 2011-12.

Surely the £28930 is for a couple not a single pensioner as there are today. Lot of pensioners were not able to look after their future becasue they were in low paid jobs and they employers did not have a pension scheme.

Pensions are only ‘lucky’ if they worked in the civil services in a high paid job because when they retire they do not have to worry above making ends meet on what I think is the second lowest paid state pension in EU.

Pensions today have to work to survive on their pittance state pensions and pay tax over their personal allowances. Also, pensioners have worked all their lives and paid NI and tax when they were young argil and healthy.
Age related conditions are not a life style choice (unlike having children) and if you are ‘lucky’ you may avoid the painful conditions but they will get you in the end of your life if you live long enough that is.

There are different needs for Older People too. Many can no longer do their essential repairs, maintenance and repainting of their homes, as they once used to when younger.

Keeping their gardens is more difficult in older age, many enjoy good health, but few escape the effects of arthritis, wear and tear of joints etc. The older generation would not have had the benefit of all the modern conveniences which take the heavy work out of everyday living nor the knowledge, to take care of themselves that is available today for today’s young people.

Keeping gardens is often more than many older people can cope with. What used to be easy and very enjoyable now seems more painful and impossible.

More Volunteering would be wonderful in many of these situations or a low cost service for those who need it.

Don’t forget the extra heating costs when one is home all day and not very active.

I am sure pensioners would galdly not take their pensions if they were able to keep working like when when they were younger.

When I was young I felt exactly like the poster that said pensions were 'lucky' but now that I am a pensioner I feel totally different and no body can say what it is going to be like to be a pensioner and scarping by until they get there.

Forgot also there is the carehome to contend with if you are put in one of them. Wonderful place where you are locked up 24/7 if you are mobile and wanting to get out of the place. Also you will have to give up all your state pension and saving to the owner of the home that is keeping you there. :mad:
If there are any erros in my post please put it down to a senior moment.

Britanniasbest

Hi teajug

I posted the original of the document you have copied to the MSE.com website forum. I have written to the Shadow Chancellor and my MP as well as Age UK (where you obviously saw that post). My request to my MP specifically asks him to challenge George Osborne in person and to reply to me in writing with his (the Chancellor's) explanation and justification. My MP has given me his word that he will do this for me. I shall also be writing to the Treasury Department asking the same questions, but don't expect a reply.

When you look at all the ways in which pensioners, specifically, have been targeted over the last year: to repay overpaid pensions/underpaid tax, reduction in Winter Fuel Allowance, reduced rate of pension increases, massive reduction in Income Tax Personal Allowance, is it any wonder my hackles are raised. If nothing is done to halt this downward spiral attack pensioners; most of whom are on low fixed incomes, they will lose out so badly by a vast amount over the coming years that the country will have a huge number of destitute pensioners to add to the total of thousands of children living already below the poverty line!

Thank you for posting my comments on MSE. I hadn't thought of using that Forum and I'm glad you have. The more people who see this and understand what is happening, the better, and maybe they will also write to their MPs?

System

Britanniasbest wrote: »

Hi teajug

I posted the original of the document you have copied to the MSE.com website forum. I have written to the Shadow Chancellor and my MP as well as Age UK (where you obviously saw that post). My request to my MP specifically asks him to challenge George Osborne in person and to reply to me in writing with his (the Chancellor's) explanation and justification. My MP has given me his word that he will do this for me.

Good luck with that reply via your MP because he will no doubt be told that many of your statements are just wrong.

Mikeyorks

Britanniasbest wrote: »

The more people who see this and understand what is happening, the better,

Having just received a PM from you to tell me this :

Mikeyorks wrote:

And you forget that a lot of pensioners who see the age related PA wholly clawed back to basic - because they have looked after their future and have income above £28930 - benefit by the extra £1000 in 2011-12.

........ is wrong. Perhaps the 'understanding' needs to be applied by yourself first. Oh ...... and the Winter Fuel allowance hasn't been decreased. It's dropped back to the figure it was at before GB applied a temporary increase as a vote sweetner.

Pennywise

Britanniasbest wrote: »

to repay overpaid pensions/underpaid tax

Which they'd have paid at the time had the mistake not been made.

Britanniasbest wrote: »

reduced rate of pension increases

But still higher than a lot of employees who are suffering pay freezes and reduced hours.

Britanniasbest wrote: »

Hi teajug

massive reduction in Income Tax Personal Allowance

No, it's an actual increase in personal tax allowance

Still, good luck with your quest. Had your statements been more factually correct, you'd have probably made a bigger impact.