Elderly teed up for Budget sting
Published 25/08/2013 | 05:00
Stella, the statistic, has had a good recession. Stella is 66, a widow, who lives in a large house in a Dublin suburb. She has no mortgage as it was repaid long ago. Sadly, her husband died in 2008, but he left her comfortably off.
He was prudent all his working life, saving for their old age. He left her his life savings of €50,000 and a risk- free share portfolio worth €300,000. She draws the old-age pension of €230 a week.
Big house, no debt, healthy income, a few bob in the bank... Stella the phantom statistic is riding out the recession, feather-bedded, unfazed.
She surveys the wreckage of the boom all around her. She is one of Ireland's supposedly privileged elderly, the group who escaped the traumas of the collapse of the Celtic Tiger. Last week, The Irish Times dubbed Stella and her ilk "a lucky generation".
What utter bunkum.
Stella the statistic is a stereotype, a figment of the national imagination. The creation of politicians and statisticians is being set up as a Budget target. The Central Statistics Office (CSO), the font of fantasy and fiction based in the Taoiseach's department, has dutifully issued a report to support the myth about Ireland's over-65s. We are being conditioned into believing that it is time to rein in the great escapees from the austerity net. Angela Merkel will be pleased: Ireland's elderly are being targeted for a Budget raid on October 15.
Stella, the real widow, is in a poverty trap. She wants to sell her big house but there are no buyers. She has just paid her property tax, which she cannot afford. She has no income outside her state pension. Her so-called risk-free portfolio of shares turns out to be a basket of bank stocks. Once worth €300,000, they would hardly raise €3,000 today. She no longer receives a red cent in dividends.
What about the cash pile of €50,000? Surely that will cushion her until the property market bounces back and bank shares recover?
Unfortunately, Stella's cash is dwindling at a rate of knots. Stella's son, Brian, took out a massive mortgage in 2007. He was made redundant in 2010. She has been meeting his monthly repayments. None of that shows up in the damn statistics. Instead, according to the statistics, Stella is loaded.
Nor does the added problem that Brian is now estranged from his wife. Stella's 38-year-old boy has moved back home to live with Stella. She is now paying the mortgage on her divorced daughter-in-law's house . . . but there are grandchildren to think of . . . They do not show up in the statistics either.
She is feeding Brian and putting a roof over his head. She is devoted to him, but he is driving her round the twist. He is bleeding her dry.
Stella's situation is common. Thousands of Irish parents are now paying the mortgages of their unfortunate children. The front-line victims of the banks are calling in parental reinforcements. The parents are responding. Wealth is quietly pouring out of the deposit accounts of the older generation to fill the black holes dug for their children by Ireland's reckless lenders. Parents are now collateral damage in the mortgage arrears disaster. Some parents even guaranteed borrowings for their children, others became joint borrowers – on the bank's insistence.
Most parents will go to the gallows for their offspring. Ireland's parents are putting their heads in the noose.
None of this (nor a lot more) shows up in the CSO's misguided survey of the relative wealth of older people published last week. A superficial examination of the findings might lead a reader to believe that Ireland's elderly were a hidden pot of gold, just what Michael Noonan and Enda Kenny need in their search for Budget victims.
The Irish Times and others swallowed the story. In an editorial on Monday, it questioned the fitness of giving the 'better off' free travel and donating a free TV licence to people over 65 and a telephone and electricity or gas allowance to citizens over 70.
It used the CSO survey to suggest the need to consider redressing the imbalance of fiscal austerity between the generations in the coming Budget.
Decoded: it is time to clobber the elderly.
God knows, I must have a sad life when I admit to reading Irish Times editorials, but they serve a useful purpose in raising my blood pressure to boiling point most mornings!
The CSO survey runs from 2004 to 2011. It is already totally out of date. Its last questionnaires to interviewees were answered nearly two years ago. The CSO took two years to publish conclusions. Today, the economic situation is totally different.
Incomes have fallen further. Property taxes (tailored for older people) have been introduced. The mortgage market is in deeper crisis. The disposable income of the elderly has tanked.
Yet are we meant to use this archive's findings to make current Budget decisions?
The archive points out that elderly people did better in the 2004 to 2011 period. It is right. From a very low base they did improve their lot (in percentage terms ) during the boom years. The state pension rose faster than most other incomes, lifting it to €230 a week. Of course, most other incomes remained much higher than those earned by the over-65s. In 2011, the average earnings from somebody in the 18-64 group were €557 a week, while those in the over-65 bracket took home an average €407 a week – from all sources.
More significantly, while the elderly benefited more – but only in percentage terms – in the 2004/11 period, an alarming trend is emerging. In the more recent 2009 to 2011 period, there is a sudden change in the poverty pattern for older people. The survey finds that on its three 'poverty' criteria, the overall 2004/2011 trend has been reversed. The elderly have been faring far worse in the final two years of the survey.
For instance, the 'Consistent Poverty Rate' for the elderly has nearly doubled between 2010 and 2011, while it has only grown marginally for the 18-64 age group. Similarly, the elderly's 'Enforced Deprivation Rate' rose faster than the under-65s' during the more recent two-year period. And the elderly's 'At Risk of Poverty Rate' has begun to rise after consistently falling between 2004 and 2009. Taking a 2004 /11 window masks the recent reversal of the elderly's fortunes.
So what has been happening in 2012 and 2013? Anecdotal evidence is compelling that the financial plight of the elderly has become much, much worse since the days of the CSO's out-of-date survey. Last week, Eamon Timmins of Age Action Ireland was adamant that more timely information would confirm this. A pity that it is not available. A pity too that Budget decisions may be based on findings that are hopelessly stale and flawed.
A pity too that we do not have figures on how much wealth has been transferred from the elderly to their offspring to rescue them from persecution by the banks. A separate survey, Fifty Plus in Ireland, by TILDA in 2011 found that more than 25 per cent of parents had made gifts of €5,000 or more in the last decade to help their children.
Since then, as the mortgage crisis spiked, the number is certain to have rocketed. Plenty of parents cannot afford such largesse. Others have emptied their piggy banks.
There is no crock of gold in the over-65s. They have already been milked by the pension levy, by high health insurance charges, by the property tax, by the cuts in telephone allowances and respite care. Prescription charges have trebled and medical cards have been taken away. Next year they will be hit by water charges.
Stella is not a statistic. She is being stitched up. She is at the end of her tether. Wrongly branded as one of a breed of undiscovered untouched plutocrats, she is suddenly insecure fearing that the Government may listen to The Irish Times and the CSO in their search for what they so insultingly call 'low-hanging fruit' in the October Budget.