Struggling through the golden years

With just a 1.1% hike in the state pension, senior citizens have little to cheer.

Anne Donnelly, 66, divorced, two grown-up children, ex-telex and fax operator for British Aerospace. She lives in London.

Like most of Britain's pensioners, Anne awaited the Chancellor's announcements about increases in the state pension with interest. She was not to be rewarded.

Anne now gets £67.09 a week in state pension. The Budget announced that the basic full state pension will rise by just 1.1 per cent from April. This increase, in line with earnings rather than prices, leaves Anne with a rise of just 75p a week. She feels she has little to be pleased about.

At first she had hoped that the figure she had seen written in the press - £82 for a single person - would apply to her. In fact it won't and, even for those that will be eligible, it does not come into effect until the next tax year.

"It is a bit better that some pensioners will get £82. But why can't they have it from April? I don't think any pensioner wants to wait for a year. Also, £82 sounds OK, but we don't know what other costs are going to go up, like Council Tax or the TV license."

Anne is not eligible because of the occupational pension she receives. She worked for British Aerospace for 17 years after a career break and now receives £84.20 a month from the company. "If I didn't have that I would be a lot worse off," she says.

But she still struggles to find the £60 a fortnight she spends on food, as well as her £104 TV license, bills and £60-a-month Council Tax. She is worried because her Council Tax is due to rise by 9% from next month.

She feels the Budget will not significantly change her circumstances and expects to continue to try to find jobs like stuffing envelopes or making overalls she can do from home.

She agrees with Lady Greengross, director general of Age Concern, who has criticised the Budget for not doing enough for old people. Lady Greengross said: "Ultimately Britain's poorest pensioners need a major increase in the basic state pension."

Anne will not benefit from the Budget's increases to the minimum income guarantee either.

Under old rules pensioners with savings under £3,000 do not suffer any reduction in the minimum income guarantee of £75 a week. Those with savings over £3,000 have their guaranteed income cut by £1 for every £250 of savings and those with savings over £8,000 are not entitled to any benefit.

The new rules up the minimum income guarantee to £78.45 and increase the £3,000 to £8,000 savings bracket to one of £6,000 to £12,000.

Joanna McClelland of Arthur Andersen says of the rise in the minimum income: "This is potentially significant for pensioners with substantial savings but low incomes."

Anne does not fall into this category. Her savings are only £1,000. But her income is £86 a week, due to the fact she worked full-time and so has an occupational as well as a state pension.

Anne will benefit from the 50% per cent rise in winter fuel allowance to £150, meant to cover pensioners' fuel bills for four months of cold weather.

"I don't have central heating because I don't think it is healthy. I will definitely benefit from the extra money, although I will have to wait until December," she says.

The high costs Anne faces from not having central heating could also come down thanks to the "affordable warmth programme", announced in the Budget, which will bring energy efficient heating to 1 million homes.

Anne will not benefit from the abolition of the TV license for over 75s from November 1 this year.

"I do resent the television license and I wish the plans to make it free for people over 75 had been expanded," she says.

Her overall verdict is negative. "If they give us more money in one place we have to keep an eye out for where they are taking it away from."