Finance Page

The State Pension

"National Insurance Pension (Old Age Pension)"
I suppose that this is something that affects most retired people. The Government likes to call it a "benefit" which implies a handout, but I worked for well over the number of qualifying years for mine and earned every penny.

During this time I paid extra into the kitty both as "graduated pension" and "State earnings related " (SERPS), but more of that later. Many of us helped to rebuild the country after the war, working for a better life for ourselves and our dependants, yet the Government refused to allow us to participate in what was rightfully ours by changing the basis on which OAPs were paid.

Pensions used to be tied to average earnings so as to allow the pensioner to enjoy the same benefits as workers, but this was changed to tie pensions to the official inflation figure. This has allowed our pensions to drop behind average earnings to a marked extent. Several bodies are working to try to redress this, and now we have a half-promise from the Govenment. It'll probably be too late for me though!

"Inflation varies according to the circumstances of the individual."
If you can afford to buy new furniture, washing machines, cars etc. inflation for you is low and may be negative, but if you can only afford to buy essentials these are the things which increase in price more rapidly and your inflation will be over the official figure.

Personal inflation is different for each individual. This is why we must work to get back to average earnings, because these are what dictate prices. Pensioners are falling back all the time. Government handouts are not the answer.

"The Great Pension fiddle 2005."
After the 75p pensions increase fiasco, the Government realised that Pensioner Power could get them out of office. Pensioners punch more than their weight when it comes to voting. So in the last couple of budgets, increases have been better; or have they?
Like many older pensioners, my pension is made up of three parts; Basic, SERPS and Graduated. In my case the SERPS part is currently 78% of the Basic and the graduated is about 6% of Basic.

In the last revision the following percentage increases were made

Basic Pension..................................2.9%
SERPS............................................ 2.9%
Graduated pension..........................3.0%

This year the percentages increases of the three elements are similar, unlike previous years. Gordon Brown must read Grandadsez. My total pension this year has increased by £4.50 a week. Already spent; read again my piece on inflation, and if you're reading this Chancellor Brown, please learn.

"Pension Forecast "
I don't know why the Government is getting so worked up about its capability to provide pensions in the future as the aged population increases. Many of the present recipients of state pensions went through the period when food was rationed during and after the war. They also took plenty of exercise; not many families had cars and the best way to get about was to walk and cycle. Later generations have been nurtured on junk foods, watch too much television and don't take enough exercise. They will not live long over pensionable age so I see the number of pensioners going down as a percentage of the population.

"Council Tax"
Council tax has always been unfair and is now becoming insupportable for many older people. My wife and I pay about 10% of our joint pensions in Council Tax for a single-bedroomed flat in sheltered housing, and each year it goes up way beyond the rate of inflation that our pensions are pegged to. We cannot get tax relief because we have moderate savings in the bank.

The only time we have had relief from Council Tax was during the Poll Tax time. It's about time that a better scheme such as a mixture of local income tax and sales tax was implemented.

"Cash back"
Every time you make a transaction in a store with a debit card the cashier asks whether you would like a "cashback". Have you ever wondered why? Stores pay to bank paper money; the more that passes through their bank the more they pay. When you take a cashback, effectively they are depositing cash for free. In the ideal situation the amount taken and the amount passed back in cashbacks would be equal.

Grandad