pensions

The pension reforms announced at the Budget have jolted Westminster from its pre-election ennui. Conservatives and Liberal Democrats are cock-a-hoop. But “It has been a disorienting few days for the opposition”, as Rafael Behr writes.

This is what can happen when a new policy is as uncompromisingly ideological as the change to annuities. Most of the objectives for government policy are not inherently divisive; parties tend to disagree over means rather than ends. In this case, however, the chancellor succeeded in making whether one supports or opposes the idea of voluntary annuities a case study in moral discombobulation. Read more

The pension changes announced at the Budget are explained quite well in the formal consultation document. I like the additional freedom being offered to pensioners. I don’t weep for the injuries to the annuities industry. But I’m worried about the short-termism that could be unleashed and the scope for new charlatans. It is no coincidence that behavioural economics is arguably most useful in pensions policy, when it helps to overcome inherent biases towards undervaluing our lifespans.

One aspect that has been neglected so far is social care – and this could end up being the test of the wisdom of the reforms. Paying for elderly care is one of biggest and fudged issues in public policy. Labour policy is that social care services should be merged with the NHS; thus it would be paid for out of taxation. When the opposition works out what it thinks of the proposed reforms, I’d expect it to talk a lot about social care.  Read more

When the new pound coin was compared with the threpenny bit, a currency that I think was last used in 1368, we should have known this would be a Budget for those in their dotage. The Conservative party’s core vote has eroded, in part because of the rise of the United Kingdom Independence party, which for all its huffing about the EU is more concerned with the familiar: immigration and living standards. The chart below, via IpsosMori/the Guardian shows the extent of this erosion. It depicts voting intention by age. Last year, for the first time, baby boomers became no more likely to say they would vote Conservative as the so-called Generation X (1966-1979).

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