"Privileged" pensioners should have benefits cut
Older people should be made to share the burden of the spending cuts, according to a report from the Institute of Economic Affairs (IEA).
The IEA says the government could save £16 billion a year by cutting pensioner concessions such as free travel, free TV licenses and the winter fuel allowance.
The think tank says older people enjoy a "privileged position" at the moment with their non-means-tested benefits not removed or reduced and the basic-state pension planning to increase above inflation.
It claims they also receive "particularly favourable treatment in the tax system", with higher personal allowances than younger people and even a marriage allowance if one partner is over 75.
But the report has been slammed by pensions expert and director general of Saga, Dr Ros Altmann.
"Quite frankly, I think this report is an outrage," she says.
"It is very easy to suggest saving public money from any group who receives it, but that does not make it right to do so. The idea that pensioners should be punished because we have a budget deficit is not well made.
"Pensioners are already suffering because the inflation rate has damaged their living standards and anyone on a level annuity is losing purchasing power rapidly."
Dr Altmann says falling interest rates and rising inflation have transferred resources from older savers and pensioners to younger borrowers and bankers.
"The idea that they should lose even more of their wealth in order to bale out the over-borrowing of banks and younger cohorts may suit those who have borrowed and those who work in the financial sector, but that does not make it fair."
Dr Altmann says radical reform of the state pension system is needed.
Do you agree that pensioners are getting an easier ride? Post your comments below and vote in our new poll.
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).
In exchange for any lump sum – usually your pension fund – an annuity is “bought” from an insurance company and provides an income for life. When you die, the income stops. Annuity rates fluctuate daily and depend on your sex (although from 21 December 2012 insurers will no longer be able to use gender as a factor when calculating annuities), age, health and a number of other factors, so you have to pick the right one and, once bought, its terms cannot be altered, so seek financial advice.