Government must not cut state pension by £10 a week – Winter Fuel Allowance should become taxable and permanent
by Dr. Ros Altmann
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Government cannot just get rid of Winter Fuel Allowance and free TV licences
This would be like cutting state pension by over £10 a week!
Clear pre-election commitments must be kept, otherwise we can never trust politicians on pensions again
We should roll the freebies into the Basic State Pension instead and move towards a decent, flat-rate pension for all older people.
Enough is enough. Pensioners should not accept the idea of Government reneging, within just a few weeks, on its pre-election firm commitment not to get rid of Winter Fuel Allowances or free TV licences and other pensioner benefits. Yes, we need to cut public spending, but pensioners should not be targeted like this, especially after the pre-election clear promises.
The UK state pension is already the lowest in the developed world and these extra benefits are an integral part of pensioner incomes. If the Government just stops paying them, it is the equivalent of cutting the state pension by over £10 a week. This would be an utter disgrace. It would be politically dangerous too.
It does not need to happen and it must not happen. If we want to reform pensions, there are far better ways in which this can be done, which can also save money. Yes, it is ridiculous to pay a tax-free Winter Fuel Allowance to people who live in their holiday home in Spain all winter, but why not make the payments taxable so they do not benefit the better off so much more than ordinary pensioners? The whole system is wrong and just taking away parts of it will not solve the underlying problem.
It is crazy to have so many add-on benefits anyway. The paternalistic notion of Government deciding how pensioners should spend money is long past its sell-by date. Government should give people a decent pension and then it is up to them to decide what they need it for.
Governments have used pensioner freebies as political vote-buyers. The Winter Fuel Allowance was introduced by the last Government as a series of temporary extra payments to please pensioners, but these payments could then be taken away at a whim.
Since the state pension is so low, I would urge the Coalition to simply roll the free benefits into the Basic State Pension and make it payable at a decent level. That would be truly radical pension reform. Those pensioners who pay tax would then be taxed on the extra income, so saving costs, but the poorest pensioners would receive the full benefit. There would be massive savings in administration costs too.
The potential for savings to be made by rationalising and simplifying our benefit system for pensioners is enormous. As the Government is examining the current system in earnest, the sooner we get some sense into this crazy system, the better.
At the moment, there are over thirty – yes thirty! – benefits that pensioners could be entitled to, they all have different rules and different qualification criteria, some will be payable to every pensioner, some only to older ones, some are tax free, some are taxable, some are means-tested and they need to be administered, claimed, assessed and paid.
Meanwhile the main National Insurance Pension – the Basic State Pension – even if paid in full, is only £97-65 a week. This is at the root of much of our pensions crisis. Even if only from age 75, let’s pay a decent state pension to all. End the indignity and complexity of relying on mean-testing and myriad additional benefits and just pay a simple flat-rate amount that pensioners can then safely build other income on top of.
Dr. Ros Altmann
Notes for Editors:
I have been looking at Pensioner Benefits again and have now found over thirty different benefits that pensioners can be entitled to. They are listed below. What a mess!
- Basic State Pension – from state pension age
- State Second Pension (S2P/SERPS/Graduated pension) – from state pension age
- Pension Credit -Guarantee Credit – from age 60
- Pension Credit – Savings Credit – only if over 65
- Category D pension (‘citizen’s pension’ of £58-50pw for over 80s)
- Age addition (25p a week for over 80s)
- Winter Fuel Allowance
- Christmas Bonus
- Housing Benefit
- Council Tax Benefit
- Bereavement Benefit
- Disability Living allowance
- Severe Disablement Allowance
- Industrial Injuries Disablement Benefit
- Carer’s Allowance
- Attendance Allowance
- Working tax credit
- Income based Jobseeker’s Allowance
- Income Support
- Free TV licences (over age 75)
- Free bus travel (over age 60)
- Subsidised transport other than bus
- Free prescriptions
- Free eye tests
- Free dental care
- Social Fund
- Cold weather payments
- Budgeting loans
- Community care grants
- Funeral payments
- Help with court fees
- Warm Front