Coffee House

Budget 2014: Who benefits from Osborne’s savings revolution?

19 March 2014

4:55 PM

19 March 2014

4:55 PM

The most obvious beneficiaries of George Osborne’s savings package are pensioners. They now can buy government bonds with an interest rate of 2.8% for an annual bond and an annual rate of 4% for a three year bond, making up for how low the Bank of England base rate is.

But it is not just pensioners who benefit. The fact that people no longer have to buy an annuity will benefit those coming up to retirement most. Those planning for retirement know that they now have far more flexibility about how they structure their retirement. While increasing the ISA limit to £15,000 helps those trying to save up a deposit for a house or a flat.

These changes also mean that Osborne can have his cake and eat it when it comes to interest rates. He can tell mortgage holders that it is thanks to the government’s fiscal policy that the Bank of England have been able to keep interest rates so low while pointing silver savers to the higher interest rates that the government is making available to them.

Subscribe to The Spectator today for a quality of argument not found in any other publication. Get more Spectator for less – just £12 for 12 issues.

Show comments
  • Mike

    Osborne hasn’t given a single thing away to help prudent pensioners so its more like a benign version of Browns pension pot raid.

    Firstly, pension pots never belonged to Osborne but by allowing pensioners to convert them to cash this allows him to claim tax from them now rather than later. In fact, people could well pay more tax on them now than waiting till later.

    Secondly, more cash in your bank account could well remove pension top ups and definitely potential care home costs.

    At a stroke, Osborne has used YOUR PENSION pot to collect tax now as well as reduce benefit costs. Net gain to you, a big fat ZERO, but a significant tax gain and benefit saving to the government.

  • Jackthesmilingblack

    Government bonds? Gimme a break. you should be looking a tax-free one-percent month-on-month gain, compounded.
    Off-shore Jack

  • monty61

    Hmm it seems to me that the obvious place for all these pension funds is BTL property or perhaps property-related funds. More malinvestment in the non-productive sector of the economy and exposure to the volatility of the housing market for people’s life savings. What could possibly go wrong?

  • Ray Turner

    Savers will only be better off when the interest rates return to sensible levels…

    • Tom Tom

      Globally savers have lost several Trillion Dollars but Governments have been able to socialise the economy this way

  • BarkingAtTreehuggers

    He must have been advised this was so good, he’s done it again! IPA tax slashed by one penny. Hahaha! Says it all.

  • WatTylersGhost

    There is only one beneficiary that Osborne has in mind for this budget – as usual – himself.

  • colliemum

    “They [pensioners] now can buy government bonds […]” – what with? Most pensioners don’t have tens of thousands of pounds languishing in a savings account, waiting for a good home. Those pensioners who have a few thousand pounds need them for emergencies and need fast access with no financial penalties and bureaucratic hassle.
    Btw – 2.3% looks great, doesn’t it. It’s the equivalent of getting 23 quid after one year, for £ 1000, not even one quid every two weeks: riches indeed!