Winter fuel allowance for pensioners re-instated 🤗

Albermarle

LHW99 said:

I wonder if in the end this will cost more than leaving things as they were.

There are already more people claiming pension credit (good). Now peopple with an income up to £35k will be getting the payments back, plus I wouldn't be surprised if at least some of those just over the £35k limit and between SPA and 75 put a bit of money into a SIPP to reduce their overall income. So possibly anyone with an income up to around £38k could get the new payment, at least for a few years, ie households up to £76k.

Such scenarios are possible, but I would think would only affect a very small number of households.
A couple would have to have at least a taxable income over £75K ( not many with that) then engineer it so they both got around £38K,   and then make moves to reduce it by adding to a pension. All just to get £100 each.

To mangle a common phrase used in these forums.

Don't let a £100 WFP wag your retirement income plans dog 

Stubod

Whatever they are planning to do it seems complex / expensive, and as already stated a threshold of £35k seems way to generous. We were originally told it was too costly to means test it, and more cost effective to just give it to everbody of SP age? 

Perhaps they should just base it on council tax bands instead, as that would at least exclude those that are really"wealthy??

hugheskevi

dosh37 said:

Silvertabby said:

squirrelpie said:

RockPools said:

There will always be a cliff edge and somebody will lose out, but this is a very generous £35k we're talking about here.

There's no requirement for a cliff edge. The payment could be tapered off between a lower and upper limit for example.

But that would be complicated, and complicated = expensive. Especially for such a low amount.   And people would still whinge.  You've only got to look at the WASPIs ( tin hat at the ready!) who mistakenly believe that the State pension age for 1950s women went from 60 to 65/66 overnight, whereas in reality it was subject to a tapered increase between 2010 and 2018.  

How can tapering be 'complicated' and 'expensive' when HMRC uses computers?

Many of the other existing tax rules such as savings tax are even more complex.

HMRC computers are nothing to write home about, with multiple different systems that do the same thing differently, but the costs go far beyond that.

Now HMRC has to code and test a whole new system just to claw back up to £300 from a small number of pensioners. They also have to upskill all their helpline people to deal with the inevitable calls about adjustments to Tax Codes and work out how many resources will be needed to deal with that and have them in place. HMRC policy specialists will have to work out every combination of circumstances (couple where one is above and the other under State Pension age, multi-generational households, couples where one has lower income and the other higher income, what to do with individuals who die after receiving the payment but before it is clawed back, etc). DWP has to change legislation, and put in place an opt-out process. DWP analysts have to calculate the cost of the policy each year and assess the Equality implications, and the Office for Budgetary Responsibility has to review and sign off those cost estimates and forecasts. Communications teams will write guides to the legislation and ensure it is all available online, whilst also ensure written copies are available to those who cannot access the internet - particularly as this is a measure affecting the elderly. They will probably also have to get everything translated into Welsh and that made available too.

That is all work that is a complete waste in productive terms - it is just redistributing money around without any overall economic gain to the UK. Those computer programmers, policy specialists, lawyers, parliamentary staff, MPs, Lords, Ministers, call centre operatives, etc, who all will collectively be involved in delivering the change could all be doing something that generates real value instead. Add to that all the lobbying effort that has gone into giving those aged 66+ with income between £12,000 and £35,000 an additional £100 - £200 per year each, and the total resources the UK has collectively devoted to a very minor resource redistribution is astonishingly inefficient, although Sir Humphrey would be delighted with the outcome.

It is a good example of why any government will find it hard to make reforms of any significance, and so are widely perceived as all being the same. Even relatively trivial changes are strongly resisted by those affected (eg Inheritance Tax and farmers, WASPI, etc), leaving politicians with a strong attraction to the status-quo and focusing on initiatives that nobody in particular opposes.

JoeCrystal

Stubod said:

Perhaps they should just base it on council tax bands instead??

But think about these poor pensioners on higher council bands! You will have many pensioners up in arms because they spent all their lives working to get a good house and be penalised for it! 

westv

Stubod said:

Whatever they are planning to do it seems complex / expensive, and as already stated a threshold of £35k seems way to generous. We were originally told it was too costly to means test it, and more cost effective to just give it to everbody of SP age? 

Perhaps they should just base it on council tax bands instead, as that would at least exclude those that are really"wealthy??

Restricting it to those claiming pension credit was the easiest way to means test it.

Dazed_and_C0nfused

LHW99 said:

I wonder if in the end this will cost more than leaving things as they were.

There are already more people claiming pension credit (good). Now peopple with an income up to £35k will be getting the payments back, plus I wouldn't be surprised if at least some of those just over the £35k limit and between SPA and 75 put a bit of money into a SIPP to reduce their overall income. So possibly anyone with an income up to around £38k could get the new payment, at least for a few years, ie households up to £76k.

The announcement on gov.uk said it was going to be based on taxable income.  Contributions to a SIPP would make no difference to that.

pinnks

hugheskevi said:

dosh37 said:

Silvertabby said:

squirrelpie said:

RockPools said:

There will always be a cliff edge and somebody will lose out, but this is a very generous £35k we're talking about here.

There's no requirement for a cliff edge. The payment could be tapered off between a lower and upper limit for example.

But that would be complicated, and complicated = expensive. Especially for such a low amount.   And people would still whinge.  You've only got to look at the WASPIs ( tin hat at the ready!) who mistakenly believe that the State pension age for 1950s women went from 60 to 65/66 overnight, whereas in reality it was subject to a tapered increase between 2010 and 2018.  

How can tapering be 'complicated' and 'expensive' when HMRC uses computers?

Many of the other existing tax rules such as savings tax are even more complex.

HMRC computers are nothing to write home about, with multiple different systems that do the same thing differently, but the costs go far beyond that.

Now HMRC has to code and test a whole new system just to claw back up to £300 from a small number of pensioners. They also have to upskill all their helpline people to deal with the inevitable calls about adjustments to Tax Codes and work out how many resources will be needed to deal with that and have them in place. HMRC policy specialists will have to work out every combination of circumstances (couple where one is above and the other under State Pension age, multi-generational households, couples where one has lower income and the other higher income, what to do with individuals who die after receiving the payment but before it is clawed back, etc). DWP has to change legislation, and put in place an opt-out process. DWP analysts have to calculate the cost of the policy each year and assess the Equality implications, and the Office for Budgetary Responsibility has to review and sign off those cost estimates and forecasts. Communications teams will write guides to the legislation and ensure it is all available online, whilst also ensure written copies are available to those who cannot access the internet - particularly as this is a measure affecting the elderly. They will probably also have to get everything translated into Welsh and that made available too.

That is all work that is a complete waste in productive terms - it is just redistributing money around without any overall economic gain to the UK. Those computer programmers, policy specialists, lawyers, parliamentary staff, MPs, Lords, Ministers, call centre operatives, etc, who all will collectively be involved in delivering the change could all be doing something that generates real value instead. Add to that all the lobbying effort that has gone into giving those aged 66+ with income between £12,000 and £35,000 an additional £100 - £200 per year each, and the total resources the UK has collectively devoted to a very minor resource redistribution is astonishingly inefficient, although Sir Humphrey would be delighted with the outcome.

It is a good example of why any government will find it hard to make reforms of any significance, and so are widely perceived as all being the same. Even relatively trivial changes are strongly resisted by those affected (eg Inheritance Tax and farmers, WASPI, etc), leaving politicians with a strong attraction to the status-quo and focusing on initiatives that nobody in particular opposes.

I couldn't agree more!

Silvertabby

westv said:

Stubod said:

Whatever they are planning to do it seems complex / expensive, and as already stated a threshold of £35k seems way to generous. We were originally told it was too costly to means test it, and more cost effective to just give it to everbody of SP age? 

Perhaps they should just base it on council tax bands instead, as that would at least exclude those that are really"wealthy??

Restricting it to those claiming pension credit was the easiest way to means test it.

The biggest problem with that are the 2 million pensioners (Age UK figures) who are literally just a few quid over the pension credit means test limit.  These are the people who really need the WFA.  And the other tasty benefits that being in receipt of pension credit opens the door to 

RockPools

Silvertabby said:

westv said:

Stubod said:

Whatever they are planning to do it seems complex / expensive, and as already stated a threshold of £35k seems way to generous. We were originally told it was too costly to means test it, and more cost effective to just give it to everbody of SP age? 

Perhaps they should just base it on council tax bands instead, as that would at least exclude those that are really"wealthy??

Restricting it to those claiming pension credit was the easiest way to means test it.

The biggest problem with that are the 2 million pensioners (Age UK figures) who are literally just a few quid over the pension credit means test limit.  These are the people who really need the WFA.  And the other tasty benefits that being in receipt of pension credit opens the door to 

Exactly this.  Also a lot of very poor pensioners are not claiming pension credits when they are eligible, so are unknowingly hit with a double-whammy.  No need to taper the benefit either - it’s a £35k threshold after all!  I thought a previous poster’s comparison with worrying about qualifying for a Nationwide £100 bonus was a great one 😆

GibbsRule_No3.

Having thought about this for a couple of days, from a PPOV I think what the £200 debate raises is how poor the State Pension is. If it was a decent amount Pension Credit would not need to be paid as much and then possibly all the added benefits that PC bring would also be lower, as not as many people would get it. Basing how poor the SP is on the fact that I still do work 16 hours a week and for that I get £40 more than the 4 weekly SP, granted if I take the 13th month SP payment into account it probably does even it out. My job is nothing special, not highly paid but 16 hours and getting more than a SP seems weird.