The Budget today contained a host of measures that’ll benefit the silver savers; those in, or coming up to, retirement. From January next month, pensioners will be able to buy pension bonds that offer a 2.8 per cent interest rate for a one year bond and a 4 per cent annual rate for a three year bond. This is far better than the rate available on the high street and will cost the government £170 million in 2015-16. It should assuage the pain, and anger, that many pensioners have felt at the government’s deliberate policy of keeping interest rates as low as possible.
Considering that defections from the Tories to Ukip have been particularly high among the over 60s, one has to imagine that this will have an electoral impact. Indeed, I understand that Osborne has had the 2014 marked down as the time to do a Budget for savers since 2011.
The cleverness of Osborne’s scheme is that these bonds, the abolition of the 10p savings rate and the increase in the ISA amounts are all paid for by enabling pensioners to take out as much as they want from their own pension pots. So, Osborne has brought forward tax revenue from decades hence to now to pay for all this.
These reforms are, as Fraser argues, sound supply-side measures. But the attention heaped on the silver savers in this Budget shows how the old benefit from the fact that they vote in far higher numbers than the rest of the population.
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