Osborne breaks pledge to UK pensioners
Did George Osborne break his promise to British pensioners? Osborne's so-called 'Granny Tax' has been found to go against a 2011 pledge that the age-related personal allowance would rise with the retail price index, until at least 2015.
The discovery was made by the National Pensioners Convention (NPC), who have launched an online petition calling for the Government to restore the allowance inflation link.
Osborne, then, appears to have shredded the promises he made in 2011. Under the revised changes, the age-related allowance for those between 65-74 rises to £10,500 on Friday from £9,940. For pensioners 75 or more it rises to £10,660 from £10,090. After that, no more rises.
This means that around 5m pensions will likely pay at least £3bn extra in tax over the following four years.
"Those who have contributed so much to society," Jane Ashcroft from not-for-profit housing provider Anchor told AOL Money, "should be able to expect support in old age yet they consistently seem to be bottom of the Chancellor's priority list. This raid on elderly people comes at a time when many are already reeling from falling state support for their care."
Worse off?However this 'Granny tax' is more likely to hit those most about to retire in the next few years. It's worth remembering also that many of today's pensioners still enjoy the fruits of a final salary pension scheme. Not all, by any means, but a very substantial number.
Retired people also pay no National Insurance Contributions, plus there is fuel payment support, free bus passes and prescriptions.
Osborne's changes however will hit those on modest incomes the most. Many pensioners still live on the paltry interest from bank savings. And those with pensions of more than £25,400 will not lose out at all.
The Treasury claims nobody will pay more tax in cash than they do today. "The poorest half of pensioners are unaffected by this change and will still pay no tax in 13/14. In addition all pensioners will benefit from the basic state pension rising by over £5 a week, the biggest ever cash increase."
You can sign the NPC petition here.