This blog refutes the argument that pension credit take up increase is bad news for the country. We should be really pleased!
Clearly there are idiots out there who claim to be “analysts” and therefore right, but are bigots who see starving the poor of pence as good policy.
Under a different Government and it was how I got to like Pension’s Minister Opperman, we saw an uptick in take up of pension credit. That policy had been lurking behind a Means Test since Gordon Brown introduced it. This blog was one of the many strategies that Government used to get people to go for it and not to feel bad if they didn’t make the test, feel great if they did. Gareth Morgan wrote a paper which I co-authored on how to claim and why to.
Pension PlayPen swung its tiny force behind it. DWP ran Pension Credit Days. All that hard work did not do what has happened since the announcement of the cutting of Winter Fuel Allowance.
And now the FT quote the analysts as being two of our own, John Greer and Steve Webb.
“We could end up in a position where the new system actually costs the government more money overall and has done considerable political damage,”
said Steve Webb, a partner at pension consultancy LCP, who first identified the potential losses.
Jon Greer, head of retirement policy at wealth manager Quilter, agreed with the calculations and said that through
“poor decision making and a hastily announced U-turn with no plan in place” the government, “may find itself adding” to welfare costs.
Actually, this Government has run a Pension Credit Awareness Day. If it lifts the cap to only stop higher rate tax-payers getting payments, the saving to Government to spend elsewhere will reduce from £1.5bn pa to £180bn but that will mean £230m goes to those who deserve it through going through the pain of pension credit claiming.
Amid warnings that the restrictions could plunge some pensioners into poverty, the DWP announced a Pension Credit Week of Action, urging those eligible to apply for a benefit worth on average £3,900 per year. It was a success, money is now going to 58,800 who should have got it, there is still a lot of money unclaimed and pension claim days should continue.
The FT tells us
At present, just over 1mn pensioners pay income tax above the basic rate — 904,000 at the 40 per cent rate and 124,000 at the 45 per cent rate — according to data provided by the department for work and pensions via a freedom of information request.
That is over 1m people who have either great pensions or wealth. We shouldn’t be jealous, we should be pleased for them.
The winter fuel payment is a lump sum of £200 a year for households with a pensioner under 80, or £300 for households with a pensioner over 80. That is not a great loss for higher rate tax-paying pensions.
The decision to reward pensioners like my Mum – 93 and just a basic rate tax-payer because of the residual of a private pension, is reasonable. The analysts who argue that “benefits” are unaffordable are wrong. I know that Steve Webb is not like that but to be quoted saying that Labour has been bad at politics is putting politics in front of people’s capacity to pay the bills.
Those who argue that we should be making pension contributions larger, should equally be argue that those in their 70s , 80s and 90s are treated better. It may not make money for the financial services industry, it may actually reduce the capacity to save in the short term, and when we start poking at the level of take up of pension credit then we lose sight of our pension system and the backstop which is in place to help some of the most vulnerable in society.
The 58,000 new pension credit claimants are a success, the inclusion of basic rate tax-paying pensioners getting winter fuel payments this year is a success for pensioner lobbying.
Let’s not be dragged back into the pit of austerity by pension and pensioner analysts.
