A.A. Latimer might not have meant for the quote to be used in last week's parliamentary setting but it certainly applies. No real surprises; we're broke and we need to save money.

Some say the way Osborne is 'saving' money though is fairly controversial. The rich appear to be paying less as the poor tighten their belt by one more notch.

Pensioners and a group of Royal Mail pensioners-to-be enter an uncertain time.

Though the introduction of the flat rate state pension makes pensions simpler to understand and the benefits of saving clearer, inflation means pensioners will see their household budgets go down in the future.

The Daily Telegraph was quick to point out that more than four million people will be £83 worse off by 2014, while 360,000 people aged 65 will lose £285.

Another issue that was reported on was the change for the roughly five million people who are presently paying income tax on their pensions. They are currently not paying tax on the first £10,500 of their income, but this allowance will be frozen.

With this plan the Treasury saves £360 million next year, with the figure increasing to £1.25bn in 2016. What this money would compensate for we dare not say, however, reports suggest it might have something to do with the 5p cut in the rate of income tax for the highest earners.

But what is weird is that the government applies the concept of like for like somewhat inconsistently.

Take the Royal Mail's workers pension pot for example, worth a staggering and oh so needed £28bn. The carefully saved and invested money will not be used for pensions, Osborne said. Instead the money will be used to cut the deficit.

It was said with pride, what a clever move, even branded a 'windfall' for the government. But nothing is further from the truth.

The scheme the government is in fact taking on comes with a £37.5bn pension liability attached, which doesn't appear yet on the Treasury's accounts, but it will in the years to come.

The move is rather short-sighted and as pension scheme trustee Paddy Briggs wrote on his blog: "The action is almost Maxwellian in its audacity and whilst presented as being in the interests of the members of the fund it is in fact a cynical move designed to boost the Treasury coffers and prepare the Royal Mail for privatisation."  

We couldn't have said it any better. The £28bn of assets are from employees, and only they should benefit from it.

Now they will lose the security they felt in their scheme and instead will be thrown onto the pile of government-pensioners-to-be who see their pension promises change year on year.

Plus, as the £37.5bn will added to the unfunded pension liabilities the government already has, the figure will be close to £1.15tn. These outstanding debts will have to be paid – probably in tax money by you and me.

So, when the government claim they are reducing the deficit by £28bn, think again. It's sunny now but will rain again later. 

azeevalkink@wilmington.co.uk

First published 27.03.2012