Winter fuel payment

MattMattMattUK

Kim_13 said:

Silvertabby said:

kb56 said:

surely this can be easily sorted via input from the tax office I’m guessing that if you’re still earning you can afford to pay for your energy. Also higher tax bracket pensioners wouldn’t qualify. I am also surprised that some residents in nursing homes qualify when they don’t even pay heating bills.

why do pensions fall short of minimum wage? The current pension rate per hour is around £6.30 based on a 35 hour week. Workers benefit from the constant reduction in national insurance this doesn’t benefit pensioners

WFA and the difference between the State pension and the minimum wage are two completely separate issues.

In the case of State pension/wages....

1.  Workers on the minimum wage have expenses that pensioners don't.  ie, child related expenses and work expenses including commuting costs, for a start.  Plus NI contributions.

2.  Pensioners (over SPA)  don't pay NI at all, so puzzled by your comment that only workers have benefitted from the recent NI reductions.  Plus pensioners and are expected to have accrued other pension(s) income.

This only skims the surface.  

It’s good point in that a pensioner who is still being paid by an employer would be better able to manage without the payment than someone just above the Pension Credit cut off, whether that be through a State Pension only or an older State Pension and a very small private pension. Having deferred the State Pension would also be an indicator that the money was not needed.

Had it been done such that only basic rate and non taxpayers would get it this year, pending development of a more suitable means test, then I think there’d be very little opposition to the move.

As Hugh points out that would not have been practical with the tax year, it would also mean that people with incomes up to £50k would still get the WFP, so a household with two pensioners on £100k would still get the WFP, which is a waste of taxpayer funds. The reason that the changes have happened is a lot of pensioners have no need whatsoever for the WFP and the Pension Credit threshold makes a reasonable amount of sense. What really needs to happen is a proper reassessment of the pension system, abolishing almost all additional payments and having a baseline pension for all and an enhanced pension for those who have paid enough tax to qualify, together with abolishing the triple lock and adding a single inflation linked annual rise. However pensions and rational are something the UK has never been able to join together. 

ali_bear

Let's face it the WFP was a state benefit handed out to a huge number of pensioners, most of whom never needed it. We can no longer afford it as a country so it has to be means tested from now on. 

This year's increase in the SP is larger than the WFP was.

Buy a warmer jumper and turn the thermostat down half a degree. 

Exodi

MattMattMattUK said:

Kim_13 said:

Silvertabby said:

kb56 said:

surely this can be easily sorted via input from the tax office I’m guessing that if you’re still earning you can afford to pay for your energy. Also higher tax bracket pensioners wouldn’t qualify. I am also surprised that some residents in nursing homes qualify when they don’t even pay heating bills.

why do pensions fall short of minimum wage? The current pension rate per hour is around £6.30 based on a 35 hour week. Workers benefit from the constant reduction in national insurance this doesn’t benefit pensioners

WFA and the difference between the State pension and the minimum wage are two completely separate issues.

In the case of State pension/wages....

1.  Workers on the minimum wage have expenses that pensioners don't.  ie, child related expenses and work expenses including commuting costs, for a start.  Plus NI contributions.

2.  Pensioners (over SPA)  don't pay NI at all, so puzzled by your comment that only workers have benefitted from the recent NI reductions.  Plus pensioners and are expected to have accrued other pension(s) income.

This only skims the surface.  

It’s good point in that a pensioner who is still being paid by an employer would be better able to manage without the payment than someone just above the Pension Credit cut off, whether that be through a State Pension only or an older State Pension and a very small private pension. Having deferred the State Pension would also be an indicator that the money was not needed.

Had it been done such that only basic rate and non taxpayers would get it this year, pending development of a more suitable means test, then I think there’d be very little opposition to the move.

As Hugh points out that would not have been practical with the tax year, it would also mean that people with incomes up to £50k would still get the WFP, so a household with two pensioners on £100k would still get the WFP, which is a waste of taxpayer funds. The reason that the changes have happened is a lot of pensioners have no need whatsoever for the WFP and the Pension Credit threshold makes a reasonable amount of sense. What really needs to happen is a proper reassessment of the pension system, abolishing almost all additional payments and having a baseline pension for all and an enhanced pension for those who have paid enough tax to qualify, together with abolishing the triple lock and adding a single inflation linked annual rise. However pensions and rational are something the UK has never been able to join together. 

Totally agree with all the above and the reality is there's what's sensible and what's realistic. Pensioners vote whereas their grandkids don't. Pensioners are unlikely to vote to make themselves poorer, even if it effectively means forcing their grandkids to increasingly subsidise them.

Kim_13 said:
Had it been done such that only basic rate and non taxpayers would get it this year, pending development of a more suitable means test, then I think there’d be very little opposition to the move.

You think?? A well off pensioner who retired early as they hit the (now removed) LTA of £1,073,100 and decided to withdraw 3.5% a year each from their pensions (which is likely to allow them to preserve their capital) would receive £37,558.50 a year. And with the full new state pension (£11,502.40) you get a total annual income of £49,060.90 - below the higher rate band.

And this is individual, you could have a couple receiving this each and that doesn't even consider drawing on some of their tax free Lump Sum Allowance or the common practice of increasing annual income by discharging ISA's. It's no suprise that there would be 'very little opposition to the move' when households could receive well over £100k a year and would still receive winter fuel payment by your suggestion.

flossymcfly

barnstar2077 said:

Talking of the pandemic, the amount of money that was spent on the NHS and on the furlough scheme must have been astronomical and completely unprecedented in history.  Yes, there have been plagues before, but for a government to pay 80% of peoples wages is remarkable.

I am surprised that we have recovered as well as we have economically.  It can't just be business as usual after such an event.  Without trying to move on to politics, I think there is going to have to be worse to come before things can start to improve again.  

Potentially the most sensible comment I have ever seen on these boards (no offence to anyone else!) Thank you  

maqsoodsahil

Nice post.

Kim_13

Exodi said:

MattMattMattUK said:

Kim_13 said:

Silvertabby said:

kb56 said:

surely this can be easily sorted via input from the tax office I’m guessing that if you’re still earning you can afford to pay for your energy. Also higher tax bracket pensioners wouldn’t qualify. I am also surprised that some residents in nursing homes qualify when they don’t even pay heating bills.

why do pensions fall short of minimum wage? The current pension rate per hour is around £6.30 based on a 35 hour week. Workers benefit from the constant reduction in national insurance this doesn’t benefit pensioners

WFA and the difference between the State pension and the minimum wage are two completely separate issues.

In the case of State pension/wages....

1.  Workers on the minimum wage have expenses that pensioners don't.  ie, child related expenses and work expenses including commuting costs, for a start.  Plus NI contributions.

2.  Pensioners (over SPA)  don't pay NI at all, so puzzled by your comment that only workers have benefitted from the recent NI reductions.  Plus pensioners and are expected to have accrued other pension(s) income.

This only skims the surface.  

It’s good point in that a pensioner who is still being paid by an employer would be better able to manage without the payment than someone just above the Pension Credit cut off, whether that be through a State Pension only or an older State Pension and a very small private pension. Having deferred the State Pension would also be an indicator that the money was not needed.

Had it been done such that only basic rate and non taxpayers would get it this year, pending development of a more suitable means test, then I think there’d be very little opposition to the move.

As Hugh points out that would not have been practical with the tax year, it would also mean that people with incomes up to £50k would still get the WFP, so a household with two pensioners on £100k would still get the WFP, which is a waste of taxpayer funds. The reason that the changes have happened is a lot of pensioners have no need whatsoever for the WFP and the Pension Credit threshold makes a reasonable amount of sense. What really needs to happen is a proper reassessment of the pension system, abolishing almost all additional payments and having a baseline pension for all and an enhanced pension for those who have paid enough tax to qualify, together with abolishing the triple lock and adding a single inflation linked annual rise. However pensions and rational are something the UK has never been able to join together. 

Totally agree with all the above and the reality is there's what's sensible and what's realistic. Pensioners vote whereas their grandkids don't. Pensioners are unlikely to vote to make themselves poorer, even if it effectively means forcing their grandkids to increasingly subsidise them.

Kim_13 said:
Had it been done such that only basic rate and non taxpayers would get it this year, pending development of a more suitable means test, then I think there’d be very little opposition to the move.

You think?? A well off pensioner who retired early as they hit the (now removed) LTA of £1,073,100 and decided to withdraw 3.5% a year each from their pensions (which is likely to allow them to preserve their capital) would receive £37,558.50 a year. And with the full new state pension (£11,502.40) you get a total annual income of £49,060.90 - below the higher rate band.

And this is individual, you could have a couple receiving this each and that doesn't even consider drawing on some of their tax free Lump Sum Allowance or the common practice of increasing annual income by discharging ISA's. It's no suprise that there would be 'very little opposition to the move' when households could receive well over £100k a year and would still receive winter fuel payment by your suggestion.

I didn’t say it was a perfect system and that was why I said pending development of a more suitable means test - though perhaps I should have qualified that such a means test could be in place for next year, so it would be an imperfect system for one year. HMRC should know who is now receiving a private pension and for how much as of the usual cut off date for WFP, so it would only be those on Self Assessment that would need to provide further info for their eligibility to be assessed.

£100K combined income seems a high amount to get a WFP but I do not think it unreasonable for the time being given that full child benefit is paid at the same level. Child Benefit also has a taper that WFP does not. 

Ultimately, I think a majority would support means testing, especially with circumstances as they are - but Pension Credit is a cliff edge set at a very low level.

Brie

barnstar2077 said:

kb56 said:

surely this can be easily sorted via input from the tax office I’m guessing that if you’re still earning you can afford to pay for your energy. Also higher tax bracket pensioners wouldn’t qualify. I am also surprised that some residents in nursing homes qualify when they don’t even pay heating bills.

why do pensions fall short of minimum wage? The current pension rate per hour is around £6.30 based on a 35 hour week. Workers benefit from the constant reduction in national insurance this doesn’t benefit pensioners

Too many people decided to retire early, after, or during the pandemic.  Recent efforts and changes have been in trying to entice those "economically inactive" people back to work.  Reducing NI and removing the LTA is all designed to keep people in the work place longer.  That was the carrot, the removal of the winter fuel payment for most is part of the stick! :  )

What efforts?  I know a number of people who are not working, some not earning a penny or receiving any benefits, others receiving inadequate benefits.  I've yet to hear of any of them receiving anything remotely related to being an enticement to return to work.  

hugheskevi

Kim_13 said:

I didn’t say it was a perfect system and that was why I said pending development of a more suitable means test - though perhaps I should have qualified that such a means test could be in place for next year, so it would be an imperfect system for one year. HMRC should know who is now receiving a private pension and for how much as of the usual cut off date for WFP, so it would only be those on Self Assessment that would need to provide further info for their eligibility to be assessed.

We have the main existing means-tested systems for:

• Pension Credit
• Housing Benefit
• Council Tax Reduction

Which in turn provide passported access to the means-tested benefits:

• Cold Weather Payments
• Winter Fuel Payments
• Funeral Expenses Payments
• Support for Mortgage Interest

Is there really a need to develop another test to determine which pensioners should get £200 / £300 once a year in November?

Winter Fuel Payments have never been about meeting a need - they might be named Winter Fuel, but is the Cold Weather Payment that is linked to the need for extra heating (as the qualification is low income and cold weather), and Funeral Expenses Payments and Support for Mortgage Interest which are there to meet specific needs of pensioners with limited resources.

Winter Fuel payments don't have any purpose other than giving pensioners a cash lump sum for no reason, which would always have been better done through the State Pension. If low income pensioners don't get enough, fix it by Pension Credit. If all pensioners don't get enough, fix it via State Pension. If some middle or high income pensioners don't get enough, fix it through the tax system. We don't need to invent new benefits unless there is a clear need, and there does not seem to be a need to pay pensioner households £200 / £300 of non-taxable cash every November.

luvchocolate

Housing benefit and council tax reduction do not get the WFA  and other help although it is a means tested benefit 

Grumpy_chap

Brie said:

What efforts?  I know a number of people who are not working, some not earning a penny or receiving any benefits, others receiving inadequate benefits.  I've yet to hear of any of them receiving anything remotely related to being an enticement to return to work.  

I understand this comment to be only referenced to those of working age / below state pension age.

Those receiving benefits will, presumably, be subject to the same drivers as anyone else receiving benefits - Work Coach support to take on more work and increase income.  If the individuals are receiving "inadequate benefits" then, surely, that is enticement itself to return to work.

In the case of those that have ceased work prior to state pension age and able to afford not to work, the enticement to return to work is, presumably, the reduction in NI payable plus the removal of pension LTA combined with increased Annual Allowance.  The changes to pension mean that the individual can earn a higher sum yet contribute more to pension to avoiding the most punitive tax bands.  Whether this will entice those who have already left work to return, or whether the changes are more effective in preventing those on the cusp of early retirement from going quite so soon I am unsure.

What sort of enticement to return to work did you have in mind?