Axing the winter fuel payment for the majority of pensioners is equivalent to reducing the state pension by 3 per cent, according to analysis by campaigner and former pension minister Baroness Ros Altmann.
Altmann, who sits in the House of Lords, is urging the government to rethink their plans. This change to the winter fuel payments is part of a wider raft of cuts announced by the Chancellor Rachel Reeves yesterday, after identifying a £22 billion black hole in the public finances.
Winter fuel payments have been automatically made to pensioner households. Those aged over 80 get £300 with younger pensioners receiving a £200 payment. This winter these fuel payments will only be paid to those on pension credit.
Altmann says: “This is worse than losing the triple lock. All over 80s face a 2.5 to 3% per cent state pension cut. This makes a mockery of the pledge to protect the triple lock, which offers a minimum 2.5% increase. I do hope the Government will reconsider.
She adds: “Older citizens are already losing the extra cost of living payments they received last winter. Now, taking away the £200 or £300 many were expecting to receive this November comes as a body blow for those just above the means-testing threshold.”
As an alternative Altmann says the chancellor should consider taxing these payments rather than abolishing them, pending proper review of state pensioner support
“I have long advocated rolling the Winter Fuel Payment into a higher state pension and then it becomes taxable, which will itself mean cost-savings to the Treasury. £300 a year may seem insignificant to most policymakers, but to pensioners it can be really important. I do hope this sudden decision can still be reversed for this year at least.”
Altmann calculates that taking £300 away from payments to the over 80s amounts to a 3 per cent cut in the money received by those on the £8,814 a year basic state pension and a 2.5 per cent cut to the amount received by those on the £11,500 new state pension.
For those under 80s, it is a 2.2 per cent reduction in payments to those on basic state pension, or a 1.7 per cent cut in the new state pension.
Altmann adds: “I understand the attraction to the Treasury of saving £1.5 billion in one fell swoop, but this will create real hardship for many older citizens and I hope there will be some reconsideration here.
“There is already a stark cliff-edge that leaves those just above the means-test cut-off losing thousands of pounds a year: This announcement adds to the problems already inherent in the current means-testing system.
“Pensioners who fail to qualify — or the 800,000 who do not claim their entitlement —for Pension Credit lose out on significant top-up benefits which the means-test passports them to, such as help with Council Tax, energy bills, cold weather payments, housing benefits and more. This means they lose a further £200 or £300, which so many can ill-afford.”
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