Those who have saved hard during their working lives and are now retired are among the hardest hit by the current conditions, with inflation and low interest rates eating away at pensions and investments. As the graph opposite shows, the cost of living for those retired is now rising at an even faster rate than headline inflation figures - largely because those in this age group spend a gretaer proportion of their money on food and heating bills.
George Osborne made clear that this was not going to be a "giveaway Budget". But the little he did have to dish out has not been shared with the over-65s. Those in this age group missed out on the Budget's main giveaway: the decision to raise the personal allowance by a further £630 from April 2012. This is on top of the £1,000 increase that comes into effect next month; by April 2012 people can earn up to £8,105 before they pay income tax).
But pensioners already benefit from a higher age-related allowance, and this is not moving up by the same margin. Currently those aged 65-74 don't pay tax until earnings exceed £9,490, which rises to £9,640 for those aged 75 and over. So its only the old and very wealthy (those earning more than £115,000) that won't benefit from this change.
Winter fuel benefit
Despite gas and electricity bills rising by almost 40pc since 2008 the oldest pensioners will get £100 less towards their fuel bills this winter.
Currently, households where at least one person is over 60 get a flat £250 payment, which rises to £400 for those over 80. But this includes an additional top-up payment, introduced three years ago to help pensioners meet rising domestic fuel bills. Mr Osborne is not renewing this "temporary" payment though, cutting the value of this benefit by £100 for those over 80, and by £50 for those over 60. Age UK, Saga and Independent Age said this will leave many of the oldest and most vulnerable pensioners struggilng with heating bills next winter. "It was disingenuous of the chancellor not to mention this reduction in his speech," said the Simon Bottery, director of policy at Independent Age. "While this was introduced as a temporary measure, the circumstances facing pensioners haven't changed since then - in fact they are arguably worse."
Inflationary changes
There was one sop for pensioners, though. One of the biggest tax raisers announced was the decision to change the way in which direct taxes are increased in line with inflation. Currently, various tax thresholds and allowances are automatically increased in line with inflation each year. This includes Isa allowances, Capital Gains Tax and the level at which you pay basic or higher-rate tax. From April 2012, the Government will use the Consumer Price Index (CPI), rather than the higher Retail Price Index, to calculate these increases.
This stealth tax will significantly boost revenues. Treasury should gain an extra £1bn from this move alone by 2015-16.
But Mr Osborne has said that certain allowances, including the age-related allowance, will continue to go up in line with RPI during the life of this Parliament, so while pensioners haven't gained, at least they haven't lost out either.
This move from RPI to CPI is also being applied to state pensions from April. The Government has been keen to promote its "triple lock" on pensions – which ensure that these payment will whichever its highest: inflation, earnings or 2pc a year. So when prices are rising faster than average earnings, as is happening now, pensioners will see a lower increase in payments.
According to the accountants Grant Thornton, this could prove costly: a husband and wife with a state pension of £14,000 a year would be £140 a year worse off, if payments increased by CPI (currently 4.5pc) rather than RPI (5.5pc).
The state pension
Many people welcomed the confirmation that the Government is planning to move towards a flat single-rate pension which, if it is not going to cost the public purse any more, is likely to be around £140 a week. This should simplify the current complex system of basic pension, additional top-up pension and means-tested benefits.
If people know what they are due to get in retirement it is hoped they will be encouraged to make more private savings, and it removes the "means-tested" trap, where those on relatively low incomes only managed to save enough to disqualify themselves from state benefits, leaving them no better off overall.
But the bad news for those who have already retired is that they won't benefit – even if they are already receiving lower pensions. As it is unclear when this new system will come in, those who are still five or 10 years away from retirement are likely to see limited benefit either.
Retiring later
Those who are still working are likely to have to wait a lot longer to get their pension, compared to those already retired. The state pension age is already set to rise to 66 by 2020 and the age at which women retire is already from 60 to equalise with men.
Mike Warburton, of Grant Thornton, said: "Overall it was a very disappointing budget for pensioners. It was as if they didn't exist. Given many have been particularly hard hit by the current economic conditions – particularly the higher inflation and lower interest rates – it seems a shame that more could not have been done to help them."
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