Winter fuel payment changes that could help more pensioners
The means-testing of pensioners' winter fuel payments is an issue which has been blamed for contributing to Labour's poor performance in May's local elections and the Runcorn and Helsby by-election.
There are several options for how the Government could go about it.
One option would be a full reversal of the decision to strip the benefit from millions of pensioners.
The decision to make it available only to those who claim pension credit last year meant those claiming winter fuel payment fell by almost 90% and saved around £1.5 billion a year, the Institute for Fiscal Studies estimates.
Undoing last year's policy change would make some 11 million more households eligible and of course wipe out the £1.5 billion in savings.
Creating a new threshold and means test would allow households not on pension credit to apply directly for winter fuel payments.
Raising it 20% above the pension credit threshold would cost around £100 million and see winter fuel payments go to around 400,000 more families, according to the Resolution Foundation.
One option would be to model this on child benefit by allowing all pensioner households to claim but then require those above a certain income level to pay some back via a self assessment tax return, the IFS notes.
But there is a risk to adopting 'a clunky bureaucratic mechanism for what is, ultimately, a relatively small payment', IFS associate director Tom Waters warned.
Very pleased to just hear the Prime Minister has just said he wants more state pensioners to get Winter Fuel Payments (WFP) and they will work out what they're doing in time for the budget.
As I've said since day one, there are two main problems with the way the means testing…
Some 1.8 million more households could get winter fuel payment at a cost of around £500 million per year if entitlement is extended to those on disability benefits, the IFS estimates.
This would be more complicated to put in place in Scotland, where disability benefit is devolved.
Extending eligibility to include those on housing and disability benefits would give support to 1.3 million more pensioner families at a cost of £300 million a year, the Resolution Foundation estimates.
This would be an 'affordable' and 'sensible way forward', chief executive Ruth Curtice said.
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One difficulty in allocating the winter fuel payment is that it currently goes to households rather than individuals.
Changing this would mean the Government could do a means test on an individual basis and use information that it already records for income tax purposes.
It would see pensioners with a low income but with a high-income spouse get the winter fuel payment.
However, it could also see couples get twice as much winter fuel payment as single people, where at the moment a single person would get the same amount as a couple sharing a household.
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