My heart has sunk since I watched Rishi Sunak’s Spring Statement. So it seemed did the nation’s
It’s a sorry state of affairs for one nation conservatism when not one penny can be found for those on universal or pension credit, days before the state pension suffers a real cut of 5% pa.
It is also a sad day for the DWP , its Secretary of State and its Minister for pensions. The pain of paying for the pandemic and the economic impact of Russia’s invasion of Ukraine is being borne by people least able to fend for themselves. Forget the sloganeering that runs through each Chancellor’s speech, the straight talking is being done elsewhere.
I know I’m more interested in the position of pensioners than some, but I’m genuinely shocked that the Chancellor has done nothing at all for pensioners for whom fuel bills make a large part of their budgets and face hikes in bills with no additional help
— Steve Webb (@stevewebb1) March 23, 2022
In my meeting with the Pensions Minister, I asked if the DWP knew what had happened to the missing 650,000 over 50 year olds who had absented themselves from both work and benefits over the past two years.
Here they are
They hang like a limp-wrist on the end of a strong arm. The explanation is in the OBR’s economic forecast.
And here is an indication of where they are getting the funds to neither work or claim..
We learn from the Sonia Rach at the FT that he Office for Budget Responsibility has revised its forecast of tax paid when people access their pension funds, expecting it to reach £1.7bn in 2021-22. Its revised forecast of £1.7bn is up from £0.4bn in 2020-21 and is £0.5bn (39 per cent) higher than it expected in October.
We may not know where these people live, but we know what they are up to. Steve Webb explains
“Pension freedoms have the effect of bringing forward tax revenue for the Treasury. Instead of using a pension pot to buy an annuity where the taxable income can run for decades, people taking larger lumps early pay tax now, and often pay more tax overall.
“There are starting to be signs that people aged 55-plus are responding to the cost-of-living crisis by tapping into their pension pots, and the OBR clearly expects this to continue.”
There is precious little friction left in the system. Those with pension pots are not listening to the guidance that has been made available through Pension Wise, nor are they getting a clear steer on pension options from financial advisers or from their pension providers. The investment pathways are not being trodden. Instead we see cash being stripped from pots and then pots stripped bare, the consequences being higher short-term revenue for the Treasury but long term issues around pensioner poverty.
I am not arguing here out of self-interest, my nest is lined. But I’m thinking of the many people my age I know, who have no comfort from this Spring Statement and only the prospect of a diminished state pension and a fast depleting pension pot, to see them through retirement.
This is a shocking state of affairs.