David Cameron talks about inheritance tax and changes in annuity rules to Saga Magazine readers

25 March 2014

The Prime Minister recognised the importance of the Saga Generation on Monday when he answered questions on the Budget to a large audience of Saga customers in Peacehaven, East Sussex.

The exclusive event, hosted by Saga Magazine, was an opportunity for pensioners to talk in detail about radical changes in the Budget – especially the relaxation of annuity rules - and other matters of importance to Britain’s over 50s.

Raising the inheritance tax threshold

During the Q and A session, the Prime Minister said he would like the Conservatives to raise the inheritance tax threshold to £1 million in their manifesto at the next election. 

“I believe in people being able to pass money down through the generations and pass things onto their children. I think you build a stronger society like that. Of course we should have to have caps and limits and we have to think about those, but generally speaking we should be encouraging people to pass things on to their children. So the ambition is still there; I would like to go further.”

Saga’s Director of Communications Paul Green commented: “Saga welcomes any considered move that allows more people the chance to pass on their hard-earned wealth to families and loved ones - cascading wealth down the generations is a good thing. There are many parts of the country where just owning your own home puts you in the frame for paying inheritance tax. 

“Whilst the rich can pay for their affairs to be carefully managed, enabling them to swerve the levy, it is the affluent middle class that end up being clobbered by a too-low inheritance tax threshold.”

Protecting benefits

At the meeting the Prime Minister also hinted that the Conservatives would promise to protect benefits like the winter fuel payments for wealthy pensioners in their election manifesto.

He said it was “incredibly condescending” to say pensioners could not be trusted with their pension money: that they might squander it and fall back on the welfare state. 

“The values, I would say, at the heart of it are, first of all, that if you work hard the system should be on your side and help you, rather than punish you. That’s why being able to earn £10,000 before paying tax is so important. 

“That’s why allowing pensioners to keep more of their savings, get a decent income in retirement and not to have to take out an annuity, so they can spend their money as they choose. That’s why that value – about trusting people, helping people and recognising the worth of working hard and saving – is so important.

“I’m really pleased about the steps we’ve been able to take to help pensioners have that dignity and security, to reward saving and to say, “It’s your money to spend as you choose.”

Pensioner bonds

Heralding the new pensioner bonds, Cameron said: “They are very important because a lot of pensioners say to me, 'Look, I’ve worked hard, I’ve put some money aside, but because interest rates are so low I don’t really get any income from my savings.' These pensioner bonds will help pensioners to do that; there’s £10 billion worth of them available, but there’s a limit of how much any one person can take. And so it’s a good way of helping pensioners have that dignity and security.”

Care funding

The Prime Minister also confirmed that pensioners who take money from their pension pots would have this taken into account when being assessed as to whether they were wealthy enough to pay for their own care. 

“If you take your money out of your pension pot and have it as your own money, then it counts as your money when you are assessed for care needs. That is true; that is the case. But, again, you have the choice: you can leave money in your pension pot or take it out.”

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

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