A suspicion held by some is that the grey consumer’s savings have been largely supporting the economy through the long years of austerity while receiving little in return by way of interest – plus lots of nagging about clogging up the NHS, and threats of mansion tax.
While not belittling the problems of the younger generation unable to get on the housing ladder (despite the help-to-buy scheme), pensioners on fixed incomes have to manage their money carefully, and, increasingly, this is something the Chancellor has become aware of.
The level of the state pension has been kept up during George Osborne’s tenure, added to which it is anticipated that he will announce the end of the 55% tax on inherited private pensions in the autumn statement – a welcome step on from the March budget, when he announced reforms that put an end to pensioners being forced to buy an annuity. While some have concerns that pensioners may make bad choices, this move has given the older person more options.
With the Bank of England suggesting that interest rates are unlikely to increase any time soon, it is possible that there will be more incentives for the older saver in the autumn statement alongside the pensioner bond introduced in the March budget. However, encouraging and incentivising the older consumer to keep spending rather than saving is no bad thing for the economy either. While some may argue for more incentives for the young, we shouldn’t forget that the old need incentives too, and it looks like this is finally being taken on board.
Isabelle Szmigin, Professor of Marketing, University of Birmingham