The pensions industry should not ignore its pensioners

The point of the pension industry is to provide support to Government in ensuring that older people are financially secure in retirement.

Yesterday, a small plank in the bridge to long security – the winter fuel allowance – was removed. The present value of a stream of index linked payments  of £200 or more paid for life from state pension age  is around £6,000.

This represents rather more than the average pot in many of the auto-enrolment master trusts.

However, this hole below the waterline, estimated to save Government £1.5bn has gone unreported in our trade press, despite its protestations that mandated contribution levels for AE need to rise.

It is Martin Lewis, not the PLSA or ABI who has voiced the fears of pensioners

“The targeting of Winter Fuel Payments is too narrow with the winter we have coming. Pensioners were already due to get less as this will be the first time since winter 2022 they haven’t got the up to £300 extra winter fuel cost of living top-up.

“The Energy Price Cap is likely to rise 10% this October and stay high across the winter, leaving most energy bills nearly double those pre-crisis, at levels unaffordable for millions.

“Many pensioners eke out the £100 to £300 Winter Fuel Payments to allow them to keep some heating on through the cold months. While there’s an argument for ending its universality due to tight national finances, it’s being squeezed to too narrow a group – just those on benefits and Pension Credit. Yet again, those just above the thresholds will be hardest hit.

“This is often justified as there’s a ‘lack of household income data’ to allow other targeting. However, there’s a usable precedent from the emergency energy crisis measures announced in April 2022, which I’d urge the Government to look at.

“Then, a payment was made to homes in council tax bands A to D – as an imperfect but workable proxy for lower household incomes. That’d allow an additional group of lower to middle-income pensioners to keep the payments and mitigate bill shocks. Councils’ discretionary funds could also be funded as in April 2022, for the limited numbers who still need help but don’t qualify.

“Plus, with this announcement, the Government has a huge moral imperative to ensure the 800,000 people eligible for Pension Credit who don’t get it, are informed, educated and helped through the process. It is planning an awareness-raising campaign, but it needs to ensure that reaches every corner – and if possible proactively and personally contact people.

“Pension Credit is a crucial gateway benefit, giving access to a host of other entitlements, and now with the link to the Winter Fuel Payment, it makes it even more important to ensure fewer miss out.”

The numbers estimated by Government to be missing out on Pension Credit appear to have risen again (now estimated at 900,000). Gareth Morgan and I wrote about this in this document which is still downloadable.

Let us hope that those facing losing a £6,000 benefit will check their eligibility for  Pension Credit ,  as it’s often a key to qualifying for other help – so may unlock £1,000s of extra support.It has been described as the “door to more”.

Use Martin Lewis’ 10-minute benefits check to see what you or your elderly loved ones could get.