Over 50s hardest hit by recession
The over 50s have been hit the hardest by the recession with older workers most at risk of redundancy and pensioners suffering an income fall of almost 25%.
Around 80% of the UK’s eight million pensioners rely on savings or share-based income during their retirement, according to the National Pensioners Convention. But the dismal performance of the stockmarket over the past year plus rock-bottom savings rates are taking their toll on retirees’ sources of income.
At the same time, the cost of living among pensioners has risen significantly, as many spend a large proportion of their income on food and fuel – just two costs that have spiralled over the past year and which are exempt from the VAT cut.
The Institute for Fiscal Studies estimates that the poorest pensioners over the age of 80 are facing an inflation rate of 6.7%‚ compared to the official rate of inflation of 3%.
Meanwhile, workers aged over 50 are being disproportionately affected by job cuts. Age Concern and Help the Aged, which joined forced to create one charity on 1 April, report that the over 50s are being hit by redundancy more than any other age group, with unemployment soaring by 34.8% over the past year.
Older workers are also likely to experience greater difficulty in securing new work, with unemployed men aged over 50 having a one in five chance of being in work two years later.
The hardship suffered by the over 50s isn’t just reflected in the figures; one in four UK older people - equivalent to nearly 2.5 million individuals - says their quality of life has deteriorated in the last 12 months‚ according to research by Age Concern and Help the Aged. This is an additional 400‚000 from 2008.
Michelle Mitchell‚ charity director for Age Concern and Help the Aged‚ says: “Despite the economic conditions dominating the headlines‚ the current government and all political parties must not shy away from addressing the long-term challenges of an ageing society. Beneath the shocking statistics are real life human tragedies - avoiding the issues is no longer an option.”
Invented by a Frenchman in 1954 and ironically introduced in the UK on 1 April 1973, VAT is an indirect tax levied on the value added in the production of goods and services, from primary production to final consumption and is paid by the buyer. Its levying is complex, with a number of exemptions and exclusions. For example, in the UK, VAT is payable on chocolate-covered biscuits, but not on chocolate-covered cakes and the non-VAT status of McVitie’s Jaffa Cakes was challenged in a UK court case to determine whether Jaffa Cake was a cake or a biscuit. The judge ruled that the Jaffa Cake is a cake, McVitie’s won the case and VAT is not paid on Jaffa Cakes in the UK.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).