Ouch. Osborne’s pension giveaway is “intergenerational theft” costing taxpayers £300m

Chancellor comes under fierce criticism from traditional allies

George Osborne is extending a pension scheme that is providing a massive boost to the pockets of wealthy pensioners while costing the taxpayer £300m.

While businesses and workers continue to be squeezed, the chancellor has announced that the value of market-beating “pensioner bonds” for sale will be increased from £10bn to £15bn before the general election. Up until now, 610,000 people have spent £7.5bn on the bonds.

The scheme, which gives pensioners market-beating returns of 2.8% for one year or 4% for three years, has been harshly criticised – including from within the chancellor’s own ranks – for helping pensioners save money, while doing nothing for younger people who might be trying to scrape money together to buy a house, for example.

Even the influential free-market think tank the Institute for Economic Affairs (IEA), which has helped form many Conservative policies in the past, accused the chancellor of buying votes.

“This announcement well and truly proves that we are not all in it together,” Mark Littlewood, director general of the IEA, said.

“Borrowing more expensively than the government needs to is effectively a direct subsidy to wealthy pensioners from the working-age population.

“Pensioner bonds have never been anything other than a gimmick that will benefit pensioners at the expense of the taxpayer, and it beggars belief that the government is prolonging such a foolish policy. It’s high time our politicians stopped buying votes with subsidies for the old and rich.”

One in 10 pensioners is set to benefit from the scheme now it has been extended.

George Osborne told the Andrew Marr show on BBC One: “Many of these pensioners do not have large sums of money, they have relatively small savings. We have had an activist monetary policy to keep interest rates low.

“We need to support savers in our country. That is one of the things that went badly wrong in Britain 10 years ago. It is perfectly reasonable for a chancellor to say: I want to support savers.”

However, many workers can only dream of having a spare £12,295 – the average put into the scheme per person.

Dr Philip Lee, a Conservative MP, told the Telegraph that pensioner bonds were a form of “intergenerational theft”, denying young people the benefits enjoyed by pensioners.

He added that it would impact young people’s likelihood of voting in the future, adding to the large number of policies directed at older people.


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Readers' comments (2)

  • Never mind. We can always close a couple of A & E departments to pay for it.

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  • Well, it is a failure in more than one way - I know many pensioners who have taken the bond, but not the bait. We're not voting Tory.

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