POOR people on benefits must not be penalised for saving for their old age, says Bury MP David Chaytor.

He is urging Chancellor Gordon Brown to use his next Budget to increase the amount people can put aside.

The Labour backbencher says the current thresholds have not kept pace with inflation or earnings, and must be substantially increased.

People with capital of £8,000 or more are currently denied income support, while £1 is taken off their benefit for every £250 they have over £3,000.

And old folk who have assets of more than £16,000 receive no help at all to pay for their care in residential or nursing homes.

"It is crazy that some of these thresholds have not been changed since the late 1980s," said the MP for Bury North. "Inflation has eroded them to the point where they are practically meaningless, and people on very modest incomes are being penalised for having been prudent enough to save.

"People who have struggled hard to put aside a nest-egg shouldn't see it disappear when they fall on hard times. Elderly people are often terrified that they will be made destitute by having to pay thousands of pounds for their care in old age."

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