Reeves – winter fuel and the politicisation of older age finance

There is a press release outlining the restoration, find it here

£200 a year for the “young old”, £300 a year for those over 80, everyone over 66 will benefit from the u-turn except those who have income of more than £35,000, who will get the winter fuel payment but have to give it back.

Thanks Mark. I hear a note of diffidence in what you say.  The Government are putting it on the HMRC to do the hokey-cokey here, to meet the nation’s outraged cries. This is a big ask for the coves in Croydon,

There are many things I would wish from the HMRC, first among them the late payment of the “net pay anomaly”, which I hope will be referred to in years to come as earning those who miss out on incentives to save for later age as “Low Earners Pension Payment” – currently odds on at HMRC as the term it will use to pay pension related payments to the poor.

Of course the Labour Government went hard at people who we feel vulnerable. The Labour Government has shown it can flex its muscles and has probably settled on a mean-tested benefit that makes sense to most of us. There will be stories in the press of the wealthy rich, declaring no income but state pension and getting fuel allowance but there will be little about the great news of this political fiasco, that it has kicked many pensioners into claiming pension credits, people who need pension support. I hope that low earners will claim “Low Earners Pension Payment” from next year.

All of this is beyond the fiscal tolerance of a friend who has advised several pension ministers . It came last night in a fit of pain at how little people understand the financing of old age through the benefits and taxation system.

What a complete nonsense.

All for up to £300 for someone over 80 and £200 for 66 (or is it 67) to age 79.

And split (somehow) between a couple if both eligible.

At a time when the basic state pension is about £12,000 for someone up to 76 (I guess) and perhaps £9,000 for those older – who if they have no other income will get pension credit.

How utterly trivial.

Of course it is a total political issue now rather than financial and nothing with any evidence related to winter fuel.

It was originally introduced as the many years of RPI rather than earnings up ratings from 1980 (Thatcher)  eventually took there toll.

But the then government in 2009 (?) decided on a stunt rather than raising Basic State Pension.

There are lots of details I was tempted to question, but they just add to the no sense to me or any sane person over-thinking a  £200 payment.

I am one of those amazed at the laziness of not looking at wealth as well as income.

We are of course reading the thoughts of Andy Young, who is almost certainly the most knowledgeable person in Britain on what happened when he was DWP Actuary for GAD and hence the Treasury and hence Britain’s financing of benefits and old age.

We should not be swayed by the politicisation of the financing of old age, it has always been political and old people can protest as they have done for winter fuel payments.

In the “not too distant” future – as Mark Ormston points out,  we will have to revisit the State Benefits and work out whether auto-enrolment has done its job. We are 13 years into semi-mandatory saving into AE and 9 years since the end of SERPS and one week into an attempt to make private pensions work.

We are beginning – once again – to take pensions seriously . As Andy puts it , wealth should be considered as generating potential income. Simply drawing down wealth to earn a poxy £200 (rising to £300 in older age) –  is farcical. The sooner we return to the point of benefits, to pay those who have no wealth, the better. These people need income and if we set £35,00o as the target income for everyone, then Reeves will have done a good job.

Addendum from Byron McKeeby (in comments)