Higher unemployment benefits for over-50s

Liam Byrne

Liam Byrne, Labour's shadow work and pensions secretary, has announced a new approach to benefits - whereby older people, who have been paying into the system for longer, should be entitled to higher payments.

So how would it work, and is this fair?%VIRTUAL-SkimlinksPromo%
Byrne made the announcement in a piece for the Daily Telegraph. At the moment there is a link between how much National Insurance you have paid during your working career so far, and how much Job-Seekers' Allowance you are entitled to, but the Labour Party wants to go further and ensure that those with long work histories will be entitled to higher payments.

Payback

Byrne wrote: "I think social security should offer more for those that chipped in most either caring or paying in National Insurance. Our most experienced workers and carers have earned an extra hand. We should make sure there something better for when they need it."

The over 50s have certainly put their fair share into the system. Byrne quotes the calculation that workers over the age of 50 have paid an average of 33 years of National Insurance Contributions. This comes to an average of £107,000 over their career.

And what do they earn in return? £71.70 a week in Job Seekers' Allowance, which lasts for just six months, and is removed altogether if the household has savings of £16,000 or their partner works more than 24 hours a week. It's hardly surprising that a survey by Age UK found that 56% of people over the age of 50 feel they have been treated badly by the government.

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Tougher problems

The problems facing unemployed workers over the age of 50 are clear. A report by Age UK found that when there's a round of redundancies the over 50s are far more likely to face the axe than those aged 24-50.

Those who claim unemployment benefit are likely to spend far longer out of work than any other age group. Age UK found that only 23% find work within three months: this compares with over 35% of those aged 35-49, and 40% of those aged 24-35.

Paul Green, director of communications for Saga adds: "Of the 389,000 unemployed people over 50, just less than half of them have been without work for 12 months or more, revealing that older workers are more likely to be unemployed longer term and find it more difficult to get a new job than younger age groups."

As the population ages and the state pension age rises, the army of unemployed older people is only going to grow, so their needs must be addressed with urgency.

Other countries offer additional help for older unemployed people. Byrne highlighted Germany, where older people get higher rates of unemployment benefit, Japan, where there are specialist job centres for this group and Canada, where there is a specific grant for older people wanting to develop new skills.

Buying votes?

However, there will be those that argue that older people also are more likely to vote, and the grey vote is going to be key in the next election. Given that every party is wrestling with the idea of cutting universal benefits for pensioners, this could soften the blow, and may be political manoeuvring.

There is also the question of where the money is going to come from. Will there be more pain for younger unemployed people, who face their own difficulties in finding work without experience on their side?

But what do you think? Do older people deserve better benefits, or is this Labour's attempt to buy the grey vote?

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If, like many Britons, you have failed to save the cash you need to maintain a comfortable standard of living in retirement, one option is to sell your home and downsize to a smaller property, using the money leftover to cover your living costs.
If moving out of the family home is too much of a wrench, however, the good news is that equity release schemes allow you to stay in your house or flat while still using the equity built up in it to provide some extra cash. The downside of the schemes, which work a bit like mortgages, is that you may not have much left to pass on to any children or other relatives.
But that's a small price to pay for a reasonable standard of living. For more information, try Age UK on 0800 169 6565.

Choosing the right annuity can have a significant impact on your retirement income. And as with most pensions, you automatically have what's called an 'open-market option' (OMO), you can scour the market for the highest annuity rate.
It is worth checking what your pension provider is offering first, though, as some companies offer guaranteed rates for existing customers that are likely to beat those available elsewhere. The Pensions Advisory Service on 0300 123 1047 is a good place to get some free advice.

On retirement, most people convert their pension fund into a guaranteed income annuity that pays out the same amount every month for the rest of their lives.
However, you can also choose an increasing annuity that pays out smaller amounts in the first few years but offers larger payments further down the line. This may prove a wise move if the rate of inflation remains at over 2%.

It is now easier to work later in life because the "default retirement age" has been scrapped.
People approaching retirement age and worrying about money can therefore choose to work for a few years longer - potentially transforming their financial situation. Other than the extra income from working, these people can look forward to higher state pensions, and higher annuity rates due to their greater age.
They can also benefit from bigger tax allowances and the fact that they no longer have to pay National Insurance contributions. Check out this nidirect website for more details.

You could get a much better rate with an impaired-life annuity if you have a medical condition that is likely to reduce your life expectancy.
Incredibly, even snoring, which is a common symptom of Sleep Apnoea could have an impact.
According to figures from MGM Advantage, a man with this condition could receive an extra £12,000 retirement income over the course of their retirement - or £571.44 extra money each year. Click here to find out more.

To maximise your retirement income, it is vital to ensure that you are receiving all the benefits to which you are entitled. These include the basic State Pension, and in some cases, the additional State Pension.
If you are on a low income, you could also qualify for the guaranteed element of Pension Credit, while those with some savings may get the savings element of this benefit. For more information about these and other benefits such as the Winter Fuel Payment, click here.

Many older couples rely on the pension income of one person - often the man. Should that person die first, the other person can therefore be left in a difficult position financially.
One way to prevent financial hardship for the surviving person is to take out a joint life annuity that will continue to pay out up to 67% of the original payments to the surviving partner should one of them die.
The disadvantage of this approach, however, is that the rate you receive will be lower. Again, the Pensions Advisory Service on 0845 601 2923 is a useful first port of call if you are unsure what to do.

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