CashNews.co
Financial analysts are divided ahead of a pivotal vote on potential amendments to the Winter Fuel Payment.
Speaking to the Express, Jason Cannon, Benefits Consulting Director at Gallagher, hinted at two possible scenarios: bolstering support or postponing judgement.
He said: “Given that a cut to the Winter Fuel Payment could impact the finances of millions of pensioners, the Government should aim to prioritise extra financial support for retirees in the upcoming budget.
“Alternatively, the Government may choose to delay the decision so any potential cut can be folded into a wider spending review in the forthcoming Spring.”
The expert also pointed out critical concerns: “The challenges are intricate and there is no ‘silver bullet’ solution. The reality is that the new qualifying benefit ‘Pension Credit’ for the Winter Fuel Payment has a low uptake, and this does not allow enough time for the situation to improve.”
The expert cautioned that implementing these changes this year could leave “millions of older people with little to no room to plan at a time when household budgets are already stretched”.
However, he also highlighted the additional benefits that Pension Credit can provide, stating: “The Credit is also a significant benefit in its own right. It could double as a gateway to other financial support such as a free TV licence, a reduction in Council Tax, and cheaper NHS services.”
On the other hand, Samantha Gratton, Associate Director and Chartered Financial Planner at Ellis Davies Financial Planning, seemed to support the cuts to Winter Fuel Payment. She noted that many of her clients do not rely on these payments and would not be significantly impacted by the changes.
She said: “It doesn’t make any real difference to their day-to-day finances, and some even feel quite awkward receiving it. So, in theory, means testing makes sense, as it would help ensure help goes to those who need it most and is not going to those who don’t.”
The expert noted, however, that affluent households may also be impacted due to the frozen personal allowance, which has resulted in some pension pots being subject to income tax.
She added: “We also have clients who wouldn’t qualify for the means-tested allowance, but have suddenly seen pension incomes being taxed. For these people, losing their Winter Fuel Allowance on top of now being taxed could make a big difference to their budgets.”
Chancellor of the Exchequer Rachel Reeves proposed the Winter Fuel Payment change early in her tenure to address the “blackhole” in public finances left by the previous Conservative government. The benefit previously provided all pensioners with £200-£300 each winter to ensure a warm home.
The Chancellor’s changes, initially set to take effect this winter, would limit eligibility to those above state pension age receiving certain benefits, reducing the number of eligible recipients from 10.8 million to 1.5 million, according to DWP estimates.
However, the measures have faced intense criticism from the public and parliamentarians.