Talk surrounding the Autumn Statement has been all about pensions, and whether George Osborne is going to conduct a tax raid. Those who are already drawing their pensions could be seen as the lucky generation: the ones with generous tax relief on pensions, good final salary schemes, and huge increases in property values.
However, Osborne isn't blind to the fact that this group could be ripe for plundering.
Property taxRetirees' properties are particularly drawing the eye - as many pensioners have built up a great deal of value in their homes over the years, and Osborne may want to get his hands on a slice of it.
The Liberal Democrats have been pushing for a Mansion Tax, and after Osborne ruled it out at the Conservative Party Conference, they have been suggesting alternatives. Options on the table include higher rates of council tax for the most expensive homes and increasing stamp duty when the priciest homes are sold.
A council tax change would have to overcome the serious obstacle that many of those who live in expensive properties are living on modest pensions and could not afford the charge. After the debacle of the Granny Tax, it is likely to be something David Cameron wants to avoid at all costs. Number 10 has categorically ruled it out in this parliament.
At the very least we are expecting a crackdown on stamp duty avoidance schemes, and new penalties for those who buy their property through a company - which is one way that wealthier buyers have cut their tax bill in the past.
Even without a specific property-related tax, Osborne can indirectly pile on the pressure on the value of properties, by freezing the inheritance tax threshold again. Currently it is stuck at £325,000 - above which value you have to pay 40% on everything you leave behind. The experts think another freeze is a very real possibility.
HelpSaga, meanwhile, is keen to point out that retirees aren't just a bottomless pit of cash for the Chancellor to dip into. The current financial crisis has caused a major financial headache for many. Dr Ros Altmann, Director General of Saga is calling for more help for pensioners with savings.
She says: "It is important that we encourage people to save for their future, but if we continue to punish those who have done so, especially as they reach retirement, younger people will decide it is simply not worth it." Specifically she wants to see are a change to ISA rules to allow more to be put into cash. However, this isn't expected to materialise this time. She is also calling for new personal saving schemes to fund later life care, but again, this would have to be something for the future.
DrawdownOne Saga suggestion which could materialise, is a change to the way that capped drawdown arrangements in pensions work. Income drawdown is the facility to continue to keep your pension savings invested and take an income each year rather than giving all the money to an insurance company to buy an annuity.
In the past three years the Treasury and The Bank of England have introduced policy changes to income drawdown which have slashed the private pension income of many retired people by more than a third. For example, the maximum annual income a 65-year-old man could draw from a £100,000 capped drawdown pension fund has fallen from £7,920 in August 2009, to £5,300 in August this year.
Altmann says: "Saga has been inundated with letters and emails from distraught and angry pensioners who have saved hard and expected their pension savings to support their retirement lifestyle. Now, despite having plenty of money in their fund, the government's rules won't allow them to spend it. There is not even any allowance for those in poorer than average health. Falling gilt yields have meant that each year they have been able to take out less and less from their pension."
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HMRC and the industry have been feverishly at work in recent weeks, so a solution is widely expected to be announced. This could be a tinkering to the way the cap is calculated in order to allow them to take more - or a fundamental review of the market.
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