How the pre-budget report will affect pensioners

Rita Young is 74 and lives in a housing association bungalow in Peterborough. The most significant announcement to come out of the chancellor's speech for her was that the basic state pension will increase by 2.5%. It comes in spite of the fact that the retail prices index, to which state pensions are pegged, stood at -1.4% in September this year, the month by which future increases are set.

In real terms, according to Alistair Darling, this amounts to a 4% increase and will bring the state pension up to £97.65. This means that with an above-indexation increase in pension credit a single pensioner could get up to £132.60 a week.

But, Young says, this falls woefully short of what pensioners really need. "Even with the increase the basic state pension is still less than £100 a week. It's not enough to live on. There are around 3 million pensioners, most of them women, still living below the poverty line.

"What we want is £165 a week and no pension credits. Not every pensioner gets pension credits and they cost such a lot for the government to administer that it's not worth it," she says.

The chancellor also announced that the government would make it easier for people to carry on working beyond retirement age by reducing the number of hours they can work while still claiming working tax credit from 30 to 16 a week from April 2011.

While she appreciates this could benefit some people, she feels many simply don't want to work into their later years. "A lot of people have worked very hard all their lives, often in manual labour jobs. They want to retire, and why shouldn't they?

"You don't mind doing a bit, but once you reach a certain age your body doesn't let you do a full day's work anymore."

Young was pleased by the chancellor's announcement that bingo tax will be lowered to 20% from 22%. "I do go to bingo regularly, it's one of my pleasures." However, her wish is that pensioners' basic income be increased significantly. "I'd like to see those bankers try to live on less than £100 a week," she says.

Case study: the high earner

Case study: young single person