20 January 2015

Am I smug?

Is the government being too nice to us pensioners?  CityAM certainly thinks so:

Quite simply, due to pensioners’ greater propensity to vote and their growing numbers, politicians have pandered in this Parliament to the interests of the old across a range of areas. The government has instituted a triple-lock so that the state pension increases by the higher of inflation, average earnings, or 2.5 per cent per year – completely unjustifiable according to any standard economic rationale. The policy has proved highly costly in a world where wage growth, and hence tax receipts, have been so subdued, and it is hard to defend on the grounds of fairness when working-age welfare has been increased much more slowly.
The protection of the winter fuel allowance, free TV licences and bus passes, when other universal benefits have been reformed, is also incredibly hard to justify. Compared to other spending areas, healthcare has been relatively protected – with a huge proportion of that budget spent on the old. There was also the decision to implement a form of the Dilnot recommendations on financing social care. This is in effect a subsidy for wealthier pensioners in need of care such that the state will protect the inheritance of their children.
But this clientelism in the quest for votes has perhaps been exemplified best in the past week, with the launch of the government’s “Pensioner Bonds”. National Savings and Investments is offering three-year bonds, open to over-65s only, with yields of 4 per cent. This comes at a time when the government could borrow by issuing three-year bonds with yields of around 0.6 per cent. In other words, the government is deliberately borrowing more expensively than it needs to, guaranteeing a healthy return for pensioners who are wealthy enough to be able to purchase up to the £10,000 limit. No wonder the registration website keeps crashing.
I suppose - grudgingly - that the writer has a point.  But, hey, we wrinklies don't get many breaks of a non-financial nature.  In any case, we're worth it ...

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