Buried in the detail of the Budget, is a plan to abolish Savings Credit, which will end up punishing modest income pensioners who did the right thing by saving for a pension during their working age lives.
In his Budget speech, George Osborne called it: “A single, generous, basic state pension for those who have worked and saved hard all their lives.”
What he didn’t tell us in his Budget speech was that actually, George Osborne plans to do the opposite and punish those who have worked and saved hard all their lives. He plans to abolish Savings Credit.
A single-tier, flat-rate pension would be funded by the abolition of Savings Credit.
Savings Credit is a benefit which is paid to modest income pensioners who have saved into a private pension.
At present, for every £1 of income above a threshold of £111.80 a week, a pensioner would receive an extra 60p in Savings Credit until they have reached a maximum Savings Credit award of £18.54 a week, at which point they will lose 40p of Savings Credit for every £1 of income above the maximum award.
Liam Byrne MP, Labour’s Shadow Work and Pensions Secretary, said:
“George Osborne has been caught bang to rights plotting another secret raid on hard-pressed pensioners. First, we had the Granny Tax. Now we've uncovered Granny Tax Mark 2: a £900 cut for pensioners who did the right thing and saved some money for retirement.
“Pensioners will be disgusted at this secret attempt to pick their pockets to pay for tax-breaks for millionaires.
“How low can you go? This Government is hell-bent on attacking the right-thinking values of hard-working people.”