"Privileged" pensioners should have benefits cut

Published by on 24 February 2011.
Last updated on 01 February 2012

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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.

Outrage

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."

Read: How rising inflation can destroy your pension

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.

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