Conservatives to means test winter fuel allowance
For the first time the Conservatives have signalled plans to end the universal winter fuel allowance with the introduction of a means tested system, likely to be based on income, if they win the general election
19 May 2017
As yet there are no specific plans about how the means testing would work with some suggestions that the pension credit system could be used as a benchmark for the means testing threshold, while it may be possible to align the limit to the taxation system.
There are an estimated 12.5m pensioners in the UK in 2014, according to ONS figures, with around 38% living on state pensions. At the moment, 5.9m over 65s pay income tax and would be an obvious target for removal of the benefit. HMRC does not have figures on what percentage of pensioner taxpayers pay higher rate tax.
Any means testing system is likely to require pensioners to complete a Department for Work and Pensions form to receive the benefit in future.
There has long been criticism of wealthy pensioners receiving the payment, but the cost of implementing means testing has been a deterrent for removal of the universal benefit. This time the Conservatives claim it would save £1.5bn a year.
If the Conservatives were to pull assets into the means testing as with their plans for the new social care floor of £100,000 this would bring up to three quarters of pensioners into scope.
Plans to introduce means testing for the winter fuel allowance would be restricted to the ‘most vulnerable’ the Conservatives claim, although there are no details about how this would be calculated.
There are currently 1.9 million claimants of pension credit (2.2m including partners), but nearly two in five (38%) of pensioners do not claim the credit they are entitled to. Average pension credit is £42 per week.
Pension credits are currently under-claimed as many people who are eligible for the benefits do not know about them or claim them. Age UK estimates that £3.4bn of pension credit and housing benefit was unclaimed by pensioners in 2014/15.
Age UK spokesperson told CCH Daily: ‘It is possible that they could use pension credit for means testing. It would be an easy way to identify vulnerable older people but we know that many people do not claim pension credit or are not aware of it.’
The winter fuel payment is currently £300 for over 80s living along and £200 from those over 65, regardless of income. The allowance is effectively halved for dual occupancy households so couples receive the same £300.
The Conservatives have committed to ‘maintain all other pension benefits’, including free bus passes, eye tests, prescriptions and TV licences, for the duration of this parliament.
There will be no changes to the attendance allowance and carer’s allowances.
By Sara White