State pensioner winter fuel payment could be | U.Okay.Finance News
The winter fuel payment for state pensioners could be scrapped altogether, in line with the Institute for Fiscal Studies (IFS).Following Prime Minister Sir Keir Starmer’s announcement that the federal government goes to re-examine the thresholds for the £200 to £300 funds for state pensioners, the IFS has seemed on the choices it says can be found to the federal government, from widening eligibility to scrapping the benefit altogether.The £200 benefit, or £300 for over-80s, was first launched by Labour in 1997 however was scaled back by Rachel Reeves final yr, in order that it’s now solely accessible to those that declare income help benefit Pension Credit, as a substitute of being paid to all pensioners mechanically.Following months of uproar in regards to the means examined adjustments, Starmer has now pledged to take a look at the thresholds for the winter fuel allowance however no additional particulars have but been given for how a lot the brink could change by. The IFS has issued a report, Expanding winter fuel payment Eligibility, which outlines the choices accessible.Among its ideas, it says that the ‘simple option’ would be to reverse the adjustments and provides WFP back to all pensioners at a value of about £1.5Bn.Or, a new means examined system could enable households not claiming Pension Credit to say WFP, the IFS says, though this could be costly to implement and a few nonetheless could not declare.Third, the federal government could make Pension Credit ‘more generous’ by withdrawing Pension Credit more slowly when a pensioner receives income, as a substitute of by £1 for each £1 of income as it’s presently.Other choices embody making WFP an particular person payment slightly than a family one, or increasing to different advantages as a substitute of simply Pension Credit, comparable to incapacity advantages. Or, the IFS argues, the model proposed by Martin Lewis could be applied, which bases eligibility on council tax bands A to C.But the IFS concludes that there’s no straightforward answer and all choices are complicated, and as a substitute, it could be easier ‘not to have WFP at all’.The report says: “If the government wants to expand WFP eligibility – without returning to the old universal system – there are no particularly easy answers to increase eligibility substantially.“Expanding eligibility to those on housing benefit (and/or disability benefits) would increase the numbers receiving winter fuel payment but still leave the vast majority of pensioners ineligible.“Going further would either involve creating a new means-test or basing eligibility on other characteristics of the household. It is fair to say that all of these are imperfect solutions – they do not expand eligibility much, or are not closely targeted towards poorer households, or impose large administrative or fiscal costs.“In light of this, it is worth stepping back and asking what role the government wants WFP to play. One option would be not to have WFP at all.”It provides: “While it is labelled as being about fuel, it is ultimately just a cash payment (though some evidence suggests the labelling does increase fuel consumption).“Insofar as the goal is to help people on low incomes, a more straightforward option is to increase Pension Credit; if the goal is to increase pensioners’ incomes more generally, one could simply raise the state pension generosity (though this would imply redistribution from singles to couples, and the government might rather avoid that). Perhaps before it tries to tweak eligibility awkwardly, the government should consider what question WFP is the answer to.”Tom Waters, an Associate Director at IFS and writer of the remark, mentioned: “There are two natural options for assessing winter fuel payment eligibility – giving it to all pensioners or restricting it to those on a means-tested benefit. The government’s reform was to go from the former to the latter, using pension credit receipt as the passport to eligibility. Middle options that significantly increase eligibility are tricky: they come with a significant price tag, or are not well targeted at low-income households, or are administratively costly. There is a clear risk to adopting a clunky bureaucratic mechanism for what is, ultimately, a relatively small payment.”
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