Granny Tax

[Russethouse]

 No comments here about last weeks budget, or indeed comments about the so called 'Granny tax' or abolition of the age allowance ?

[Gardengirl]

Well, I was as surprised as anyone else at this, as everything else seemed to have been leaked beforehand. I can't agree with the Tory spokesmen that it will be more than made up for with the rise in state pension - many people had already taken the coming rise into account in their budgets, and anyway, it's due to inflation when the rise was fixed last autumn.

However, I can see that it seems fairer to younger people that OAPs are being seen to be sharing in the general pain. The fact that there have been losses to older people from the continued low interest rate etc doesn't necessarily mean much to people with no savings and perhaps no employment.

[idun]

It strikes me that many pensioners are relatively well off. My Dad complains about his pension, but he still picks up far more than those working and on a minimum wage. My parents in law always had more disposable income than we did and would say how poor they were all the time, compared to us they were relatively well off.

And where my Dad lives, there are those on 'just' the state pension. But the truth is that they are not badly off either. They do not pay council tax, they get extra benefit and do not pay for many things that the rest of us pay for, and he reckons that they are better off than he is, which they may well be. It is complex.

So granny tax, well, it isn't is it. It is just that the tax advantage is going. NOW if they stopped the bus passes then I do think that many people would take very badly to that.

[Patf]

The really poor retired people won't be affected as they're on starvation level already, below the personal allowance.

Those of us who have been able to add a bit more to our retirement income will feel the pinch. But I suppose Osborne's lot think "that generation won't complain, they're used to tightening their belts."

I just wish there was a political party for the retired, we need a pressure group like that.

But I agree with Garden Girl too, we should contribute to the economies.

I'm utterly appalled at the incompetence and thoughtless selfishness of the present government.

[Alan Zoff]

I just wish more grannies had enough income to be affected by the new rules.

[woolybanana]

Can anyone explain what has happened, exactly?

[Boiling a frog]

You do not want to know

[Rabbie]

At present those of us over 65 have a larger tax free allowance than younger people.  This will not apply to people who have their 65th birthday after 5th April 2013. For those of us that are older the allowance will be frozen at its present level until the ordinary allowance catches up (it is normally adjusted for inflation each year). Although I am affected by this I cannot honestly see any real reason why I should get a larger allowance than other people

[idun]

Patf, starvation? I keep hearing this heat or eat, but I do not understand it.

[YCCMB]

At least some pensioners have had some benefit from this for some time.

TBH, I laughed...and not from amusement! I'm sure there are many people far worse off than I am now, or than I will be in the future. However (and I think I've said this before) through an accident of birth, (our own, and the birth of both our kids) we  never got any help with childcare when our children were small, so we had to pay for it out of our taxed income. When our children got older, they just "came of age" in time to both pay tuition fees at University. Meantime, my retirement age went up by five, and then six years. Early retirement was more or less out of the question, as we needed to give some support to our two children whilst they were at University. During our working lives up to this point, we managed to save a bit, but of course we weren't necessarily prepared for the demise of the Final Salary pension scheme, nor for the dramatic reduction in interest rates that eroded other savings. The only bit of good luck was not having children 4 years later...

There's no "poor me" about this. As I said, it just makes me laugh each time the budget comes around and I find that the Government of the day (because, frankly, it doesn't matter who is in power) has found yet another way to ensure I don't get too excited about the prospect of stopping work and putting my feet up. As I said, millions of people..probably many of them pensioners...are a lot worse off than I am. As for my children: will they EVER be able to retire? I somehow doubt it..

It's actually quite refreshing to read a couple of contributions on this thread saying that pensioners should contribute a bit to the general belt-tightening. It is, after all, the working population (and their already quite tight belts) who are paying the contributions that help pay the State pension.

[NormanH]

[quote user="idun"]

It strikes me that many pensioners are relatively well off. My Dad complains about his pension, but he still picks up far more than those working and on a minimum wage. My parents in law always had more disposable income than we did and would say how poor they were all the time, compared to us they were relatively well off.

And where my Dad lives, there are those on 'just' the state pension. But the truth is that they are not badly off either. They do not pay council tax, they get extra benefit and do not pay for many things that the rest of us pay for, and he reckons that they are better off than he is, which they may well be. It is complex.

So granny tax, well, it isn't is it. It is just that the tax advantage is going. NOW if they stopped the bus passes then I do think that many people would take very badly to that.

[/quote]

France is not quite so kind. No bus pass, no automatic exemption from taxe d'habitation, and you still pay some social charges on your pension, although not côtisations...

[Frederick]

I sometimes wonder if our gereration have spoiled our kids as we brought them up.  Those of us who remember rationing when children were brought up in an age where  putting something away for a rainy day was the norm for our parents . Many on here  seem to have inherited that ethic and have worked hard ,saved put somthing by for the retirement years .......and are now being envied for doing it .

I recall the days when nothing was bought unless the money had been saved up to pay for it .  But  along came buying on the " Never Never " and we have shown our children they can now  have what they want when they want it .

Our children are passsing that onto theirs only now with  the stupdity in my view  of spoiling them even more by giving  everything they ask for and  encouraging  wasting money on designer trainers  and the like to get ruined quickly  when a much cheaper make would do the same job .

  The cats out of the bag now ... We have encouraged living in debt and unless  that situation is reversed and living within their means is instilled  into  people they will have to keep on  working   to the day they drop .

[YCCMB]

I don't "envy" anyone who's put something away for a rainy day...good grief, I've been doing that myself for all of my working life.

As for our children (well, mine, anyway)..they are both at University (the eldest for the second time, doing a Masters) and are working all the hours they're not studying...but it doesn't detract from the fact that they're also both in debt up to the eyeballs thanks to their tuition fees, which have to be paid back. It's only a matter of a few weeks ago that the Government scrapped an idea to make students pay a massive penalty for paying off those debts early: which is one of the daftest things I've ever heard. ("Early", by the way, was going to be "within 30 years")

We've actually created a generation who have little or no choice but to incur debt. Even the most assiduous savers are finding that scraping together the deposit on a house or flat is something they might never achieve. If you leave education with debts of £30K or more (and it's going to be a LOT more in future), what chance do you have of saving enough to move on with your life after you've paid rent, food etc?

The greatest disservice done by the older generation to the younger was probably to procreate in such numbers. And no, I'm not being flippant. Not for nothing are we the "baby boomers"...as older folk outnumber younger to a greater and greater extent (and that's only being exacerbated by the fact that people can't afford to have children till much later, hence there are fewer children being born per family), the younger generation are not only having to keep their own heads above water, but will probably have to pay an increasing percentage of their earnings towards National Insurance (OK, I know...it didn't go up last week, but Darling increased it) which funds, among other things, pensions..

Those lucky enough to have already reached retirement and reaped the benefit of their pensions (private or otherwise) are just that: lucky. It isn't going to get any easier in the future, and that's not just because of the failings of the younger generation, it's also a legacy from the past.

[Russethouse]

Just playing devils advocate: the generation being targeted had the advantage of the opportunity of free university education and in addition have seen their homes rocket in value . For example my parents paid under £3000 for their house, now worth £300,000 +. The house I live in is probably worth 6 times what we paid for it. That probably wont happen in the future....

[Patf]

Yes we are "lucky", and fully recognise that. We were lucky never to be without work too.

But about those retired whose income is below the PA threshold , for whom I said "starvation level":

For example, (God forbid) I was a widow, living in our bungalow in the UK with only OAP to live on ?£92pw?. There's a small mortgage, about £40pw, heating and water bills, say £30pw. That leaves just over £30pw for everything else. No chance of running a car, so thank goodness for travel passes, as Idun says. And if you need to do repairs to the house, forget it.

And if it was a man in that situation, fags and beer would take up the food allowance.

[Russethouse]

Pat, A friend has just been widowed and gets £142 pw, which I think is the minimum now.

[idun]

NormanH, there is no automatic reduction in council tax in the UK. It is the reserve of those who had the misfortune of having poor paid jobs throughout their lives and no private pension schemes or those that simply have never or rarely worked. They get extra benefits and then it's like a magic key to get  lots of other stuff for free.

I know how the french system works. I read something about the cost of living increase in french pensions increase is being delayed until June / July, but then being back dated; nothing I can do about it, so will wait and see. We certainly haven't been officially told.

Interesting, you don't call the social charges on a french pension 'cotisations'. If they take it, we cotison?   And I suppose that I rather feel about it like this little article really, although I'm sure that there are many other arguments.  

http://www.agoravox.fr/tribune-libre/article/les-charges-sociales-n-existent-111126

 

 

[Russethouse]

My mothers council tax is reduced but I can't remember if its because of her age (she is 92) or because she is single.

[idun]

[quote user="Russethouse"]Pat, A friend has just been widowed and gets £142 pw, which I think is the minimum now.[/quote]

If anyone only gets £93 a week, then they should apply for a pension credit, if they live in the UK. And as I said too, once those extra benefits start, lots of other stuff does too, if they too are claimed ofcourse.

I cannot say that I don't know anyone who won't have a mortgage when they get their pension, I know one person who will. Surely that is the thing when we get mortgages, to be free of them when the pension kicks in?

 

We are saying that, my friend's MIL in France was on just over 300€ a month. And she never asked her family for a sou and she could have done, for in France the children and grand children would have been expected to chip in. She managed and took nothing.

[YCCMB]

According to a little ready-reckoner thing I got sent in the post this very morning, things at present in the UK (and going forward) are as follows:

Personal allowances for pensioners are currently £9940 per annum, versus £7475 for someone below pension age. The £9940 is for over 65's, rising to £10090 once you reach 75. Next year  (or rather, next month) that goes up to £10500 and £10660 versus £8105 if you are under 65.

The basic retirement pensions are currently £102.15 per week rising to £107.45 for a single person, and £163.35 rising to £171.85 for a married couple.

Current pension credits guarantee to top up your income to

• £137.35 if you are single 
• £209.70 if you have a partner

On top of this, you can get savings credit, even if the money you have coming in is up to about:

• £188 a week if you are single
• £277 a week if you have a partner

This can add another £20-27 a week to your income.

So, it appears quite possible that you should be entitled to enough to make your weekly income up to around £190-£200 a week as a single pensioner. Add to that the reductions in Council tax, winter fuel allowance and free travel, plus free prescriptions and the likelihood of not having a mortgage, or alternatively some help with rent, and it really doesn't look that bad.

And, before anyone thinks I'm getting a bit carried away, that's a better package than I'm on at the moment, and I'm working.

[Patf]

That's not as bad as I thought then. But many old folk might be too proud or too doolally to claim all that they're entitled to.

[EmilyA]

The house prices thing is interesting though. We bought our first house for £4250 in 1971. It sounds cheap, but our income was £1250pa and the mortgage rate was 7.5% or thereabouts. We had no car, no TV, no washing machine, no central heating (sounds a bit Monty Python sketch I know). Is that really such a huge difference for today's first-time buyers?

[Russethouse]

Add to that the reductions in Council tax, winter fuel allowance and free travel, plus free prescriptions and the likelihood of not having a mortgage, or alternatively some help with rent

I'm not sure of the parameters for a reduction in Council tax, but not all pensioners will get it. If anyone gets 'Pension Credit' that is a 'gateway benefit' and opens the door to other things. The current help with rent in my area is £600 per month - its virtually impossible to find anything in the private sector at that rate.....

Emily - in 1986 we felt quite daring buying this house, but in 2010 we had a small extension, and moved the kitchen to another room,  that cost about the same amount as the price of the whole house 24 years before.

I doubt whether house buyers will see values increase like they did in the 80's & 90's.

[EmilyA]

Just had a look and an identical house to the one we bought for £4250 in 1971 (North Wales) was worth £100,000 last year. Is that a huge increase in value relative to 1971? I don't doubt that some people played the property market and made a lot of money, but if you buy your house to live in it, I am not sure how it necessarily makes you hugely rich. Surely you live in it until you either sell it to pay for residential care or you leave it to your children (or whoever)? At best you might be able to release a bit of capital and downsize.

[YCCMB]

[quote user="EmilyA"]Just had a look and an identical house to the one we bought for £4250 in 1971 (North Wales) was worth £100,000 last year. Is that a huge increase in value relative to 1971? I don't doubt that some people played the property market and made a lot of money, but if you buy your house to live in it, I am not sure how it necessarily makes you hugely rich. Surely you live in it until you either sell it to pay for residential care or you leave it to your children (or whoever)? At best you might be able to release a bit of capital and downsize.[/quote]

When we bought our first flat, mortgage rates were up around 17%!!

The "huge difference" for first-time buyers now is, of course, that they have to have a whopping deposit of a minimum 20-25%. Consider that my eldest son's 2-bed maisonette in a not especially desirable part of London cost, five years ago, £40K MORE than we paid for our house some twelve years prior to that...and that was before the massive deposit rules came into play.  North Wales versus London and the suburbs isn't really comparing like with like, I know, but apparently (Location, Location, Location dixit) my neck of the woods has the highest property prices in the UK at some 46% above the national average. We didn't move here by choice, either, it was a work relocation. But that's part of the problem for today's first-time buyers: go where the work is, for better salaries and more work - and have little or no chance of getting on the property ladder, or go to somewhere where property prices are low and there's no work. Most contributors to this forum will probably attest to the fact that France is very similar in this regard....