What the election means for pensioners - will you face a shock?

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What the election means for pensioners

Pensioners are vital to the General Election, so have been a major focus for the manifestos. The promises have been coming thick and fast - on everything from the triple lock to state pension ages. Potential threats have been there too (albeit hedged around with protestations that we all have to play our part and face difficult decisions).

Before retirees head to the Ballot Box, therefore, they need to know the manifesto pledges that will affect them the most. We have tracked down ten - and some of them would make an enormous difference to pensioners.

See also: Will your pension savings last as long as your retirement?

See also: One in seven get to retirement with no pension

See also: State pensions should be axed for rich pensioners

1. The Conservatives would ditch the triple lock
Labour and the Liberal Democrats have promised to keep the triple lock, but the Conservatives would drop it after 2020 in favour of a double lock, so that pensions are only guaranteed to keep pace with inflation and wage rises - rather than at least 2.5%.

It's easy to see why each party has taken this approach: Labour and the Liberal Democrats need to appeal to all the voters they can, and pensioners tend to vote - so are essential to have on-side. Chris Noon, Partner, Hymans Robertson says: "Labour's commitment to the triple lock is welcomed - it helps low income current and future pensioners who rely mostly on the state pension. They would be worst hit by the removal of the triple lock. It's also politically astute – it's likely to be a low cost commitment over the course of the next parliament but will be received well by the electorate."

The Conservatives, meanwhile are committed to cutting the welfare bill, and have been held back from pensioner cuts by this promise. It has been seen as a politically difficult cut, because it risks alienating pensioners, but the Conservatives believe they have a big enough majority to risk it now.

2. The Conservatives would means test the winter fuel allowance
Labour has pledged to keep the winter fuel allowance (and the free bus pass), while the Conservatives have said that the wealthiest pensioners will lose their fuel allowance. The Conservative cuts are the culmination of much rumbling about universal pensioner benefits for years, and again it seems as though they feel in a strong enough position to make the cuts and face the ire of pensioners.

3. Labour will halt the rise in the state pension age
Labour has said that the maximum the state pension will rise to is the age of 66 - seeing off the spectre of never-ending rises. It's set to be popular, but the experts warn that longer life spans means this may not be a sensible move. Noon says: "Proposing a maximum State Pension age of 66 is too inflexible and completely arbitrary." Tom McPhail, Head of Policy at Hargreaves Lansdown, meanwhile, warns that if this proposal is to be cost-neutral, it would mean cutting state pensions by £800 a year.

The Conservative party, meanwhile, has confirmed that state pension ages will rise, although McPhail says: "They have ducked until after the election the question of how far and how fast. Those aged in their early 40s and below should brace themselves for another year or two of work before getting their state pension; age 70 still looks on the cards for those in their 20s and 30s."

4. Labour would compensate women caught out by state pension age rises
In power the Conservatives (and the Liberal Democrats as part of the coalition) said their hands were tied, and they could do nothing for women born in the 1950s who were wrong-footed by rises in their state pension age. Labour has said it will extend pension credit to compensate these women.

5. The Liberal Democrats will consider a flat rate of tax relief for pensions
This is something that commentators have been crying out for, but didn't make an appearance in the Labour or Conservative manifestos. At the moment, by far the majority of pension tax relief is enjoyed by the very wealthiest savers. By introducing a flat rate, a government could make tax relief more generous for basic rate taxpayers - encouraging people to save more for their future - and make the distribution of tax relief far fairer.

6. The Conservatives would raise the level of assets that people can have and still get free elderly care
They would quadruple the level of assets that people could hold before they have to pay for care to from £23,250 to £100,000. It means that whatever care they are paying for, once someone's estate has been run down to £100,000, their care will be free.

7. However, the Conservatives would make more people pay for care
The value of people's homes will be included in an assessment of their assets - regardless of whether they are receiving care in their own home or going into residential care. Anyone with more than £100,000 in assets will have to pay for their own elderly care in their homes - rather than having the council pay for it. This will mean many more people paying for care.

8. The Conservatives would enable care bills to be paid after your death
The Conservatives have also pledged to extend the rules that allow people to build up care bills during their lifetime, and pay them from the sale of their home after their death - so people won't have to sell up during their lifetime in order to pay for care.

9. Labour would protect pensions for all UK citizens living overseas
This would mean that pensioners living in the European Union, worried about the impact of Brexit on their position, could be confident that their state pension would not lose value.

10. The Liberal Democrats would reverse tax giveaways
The manifesto also outlines they will 'reverse a number of the Conservatives' unfair and unjustified tax cuts' including Capital Gains Tax and Inheritance Tax. Danny Cox, Chartered Financial Planner at Hargreaves Lansdown, points out that both ideas have flaws. The money the government makes from CGT actually goes up when the tax is cut - because people crystallise their gains - so it won't achieve their aims. Meanwhile, inheritance tax may have seen a new type of allowance, but let's not overlook the fact that the threshold for paying the tax has been frozen since 2009 - dragging more and more people into paying this unpopular and expensive tax.

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How we spend our pensions

Figures from Saga show that the over 50s now account for the majority of money spent by Brits on travel and tourism. They have the time to spare, the money, and they are healthy enough to take on the world.

A poll from Abta found that in the wake of pension freedoms, 35% of people were considering cashing in at least part of their pension to travel. A separate study by Senior Railcard found that pensioners take an average of three holidays a year, plus two weekends away, and 17 day trips.

Research from Senior Railcard found that retirees eat out an average of three times a month. However, one in ten do so more than twice a week, and one in three people said that one of the first things they did when they retired was to go out for lunch with their friends.

Of course, just because retirees want to enjoy themselves, it doesn't mean they are happy to throw money away. The vast majority are keen to eat at lunchtimes, when a fixed lunch menu tends to be cheaper, and canny retirees are skilled at tracking down pensioner special offers too.

Figures from the Office for National Statistics show that on average nearly a fifth of the money spent by people aged 65-74 is on leisure. This includes everything from the cinema and theatre to golfing and gardening. They spent more on this than on food, energy bills and transport.

A report by Canada Life found that retirees are spending £4,279 a year on having fun - that’s more than £1,000 more than they spend on boring essentials, and is a 74% increase over the past ten years. It went on to predict that this trend was set to continue, and that pension freedoms would encourage people to spoil themselves a bit more in retirement

Pensioner property wealth is now over £850 billion, and all these family homes don’t look after themselves. The Senior Railcard survey put home renovations in the top 20 activities people got stuck into on retirement, and figures from ABTA found that almost a third of people who were considering raiding their pension pots under the new pension freedoms planned to spend the cash on their home. This seems like an eminently sensible investment - looking after what is undoubtedly their most valuable asset.

Unsurprisingly, while some pensioners are very well off indeed, others are struggling with debt. Figures from Key Retirement found that the average retiree has £34,000 of debt.

Most of this is mortgage borrowing - in many cases driven up by the number of people who unwittingly signed up to an interest-only mortgage. However, credit cards, overdrafts, and loans are also common. It’s why so many pensioners have used pension freedoms to access enough cash to pay their debts.

The day to day basics are swallowing up their fair share of pensioner cash too. On average, people aged 65-74 spend a third of their weekly income on essentials like food and bills - which is hardly living the high life.
The bank of gran and grandad has become an increasingly vital source of cash for families. According to Key Retirement, of those who release equity from their property, 21% of them use the cash to treat their children and grandchildren. This includes an average of £33,350 to help children get onto the property ladder, £6,000 to buy them a new car, £11,000 on family weddings, and £24,780 giving grandchildren a helping hand.

While retirees are quite rightly spending what they need to enjoy retirement, they are hardly all throwing caution to the wind, buying flash cars and spending the kids' inheritance.

Most expect to have something left over to pass onto their family after their death. Some 69% expect to leave property in their wills, and 75% expect to leave cash - according to Unbiased.co.uk - because while baby boomers know how to have fun - they also know how to save for the future.

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