Dr Ros Altmann, a savings and investment expert and former Government policy adviser, says money belonging to savers and pensioners can play an important part in revitalising Britain’s economy.
She wants a Budget where wealthy pensioners are taxed on benefits such as Winter Fuel Payments, and pension or insurance funds are used to fund projects for growth. She also believes it is vital to see measures that would revive a savings culture, recognising the traditional British values of striving to be self-reliant and saving for the future, rather than just living for today and relying on more borrowing.
Dr Altmann says it is particularly important to see the introduction of new schemes encouraging people to save for care in later life.
She says: “We need a Budget that values what pensioners have done for society - and recognises their on-going contribution to the economy.”
LATER LIFE CARE
The Government should set in place schemes to encourage people to address the issue of later-life care with incentives for them to invest - such as special savings accounts or Care-ISAs. An additional ISA allowance for care saving plans and better-value equity release products would help address the social care funding crisis.
PENSION FUNDS
Local authority pension funds have GBP150 billion of assets but significant amounts of this are invested in gilts. This money - pensioners’ assets - could be used to stimulate growth directly, paying for house building or infrastructure, which would create employment and revitalise the economy. The Government would have to underpin a guaranteed minimum return in future to give trustees the confidence to commit their billions of assets to such projects.
TAX PENSIONER BENEFITS
Currently, pensioners' Winter Fuel Payments are tax-free. That means they are worth far more to the highest income pensioners than others. These payments could be taxed, bringing Government revenue which could be used to encourage growth. The principle of paying universal benefits is important, rather than increasing means-testing, however it is far fairer to ensure that the money is taxed.
ISA RULES
Dr Altmann is urging the Chancellor to change the ISA rules so that ISA investors can choose whether to put all their annual ISA allowance in cash, or in stocks and shares, or both, with free transfers between each. Current ISA rules only allow half the annual allowance to be put into cash ISAs, and the other half must go into stocks and shares. Older people who need to live on their savings cannot afford to gamble on the stock market, nor can younger generations who are saving for a house deposit. It is important, especially given the dramatic drop in savings interest rates, that the Government helps savers and allows them the choice of whether to invest in cash or other assets freely.
ANNUITIES
Dr Altmann says she’d like to see a shake-up in the annuities market - with urgent attention being given to fairer terms for those buying annuities. This one-off irreversible purchase brings in huge profits for the insurers, at the expense of trusting customers. Those coming up to retirement need to find the right annuity at a top rate, but the system currently makes that far too difficult. She would like to see the Chancellor insist that annuity purchasers are not charged for advice they do not receive, and that those selling annuities are obliged to treat customers fairly and help them achieve the best possible retirement incomes for themselves and their families after a lifetime of saving.
TEMPORARY TAX BREAKS FOR CAPITAL EXPENDITURE & HOUSING
Dr Altmann is calling on the Chancellor to introduce temporary tax breaks for companies investing in new plant and equipment or new housing developments over the coming 12 months. A 'use it or lose it' special allowance that would encourage companies to bring forward any investments they may be considering in plant and equipment or housebuilding for the coming years. This would kick-start the growth that we so urgently require.
DON'T CREATE MORE NEW MONEY, USE OLD MONEY WISELY
She also wants the Chancellor to tell the Bank of England not to print more money - the bank’s quantitative easing programme was designed to stimulate recovery but it has clearly not worked and new approaches are likely to be more effective. Instead of printing more new money, she is urging policymakers to put the old money from people's accumulated savings and pensions to productive use to stimulate growth directly, bypassing the banks if necessary.
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