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UNIVERSAL BENEFITS

Later Life Ambitions Policy Positions

There are 1.6 million pensioners living in poverty and a further 1.1 million have incomes just above the poverty line. The typical income in the first year of retirement is around £11,000 – less than the new national living wage. Over half of all pensioners do not receive enough income to pay income tax and only 4% pay higher or additional rate of tax.

Age-related benefits, which are available to all pensioners, such as free prescriptions, concessionary bus passes and free TV licences therefore play a vital role in reducing pensioner poverty and ensuring that older people are able to play an active part in society. Indeed some universal benefits, such as the Winter Fuel Payment, were introduced because the State Pension did not provide adequate income to keep pensioners from poverty.

There are very few specific state benefits linked to age, of which the most significant is the State Pension. The qualification for the State Pension is by age and the number of years’ national insurance contributions. The main age-related payments are the winter fuel payment, concessions on local buses (assuming there are services to use and people are able to get on and off buses), a free TV licence at age 75 and (like other groups including children and people with certain medical conditions) free prescriptions and eye tests. Overall, universal benefits comprise only a tiny proportion of the Department for Work and Pensions’ budget – just 1.5%.

Many universal benefits have a positive impact on the UK economy as a whole, as well as local economies. For example, concessionary bus passes boost the local economy by enabling older people to access, and spend money in, town centres and other shopping areas.

Pensioners understand more than most that times are tight, and that we all have to make sacrifices for the good of our country. However, our members strongly oppose means-testing.

All the available evidence demonstrates that means-testing fails to provide the poorest pensioners with the support they need and are entitled to, whether that is because pensioners are not aware of their entitlements, assume they are not eligible or are simply too proud to make a claim. 65% of our members think that wealthier pensioners should still be entitled to all age-related benefits.

In addition, making these benefits conditional on income or physical need has the potential to promote greater inequality and foster divisions both within the older population and between generations. Research has suggested that the public associates conditional benefits, such as universal credit or personal independence payments, with vulnerability – whereas universal benefits such as free travel and fuel subsidies are seen as a form of respect from the state for hard work and resilience over a lifetime as a UK citizen.

Furthermore, introducing means-testing to remove benefits from wealthier pensioners may also cost more than it saves. For example, an average new Pensions Credit application costs £351 to administer in comparison to £14 for the state pension.

Universal benefits must therefore be protected and we welcome the commitment in the Conservative DUP deal to retain the winter fuel payment for all pensioners. If, in the future, the Government reaches a decision to reduce spending on pensioners, the taxation of universal benefits may be the fairest way to ensure that the poorest pensioners get the support they deserve.

One upcoming change within the universal benefits system is the planned transfer of responsibility for free TV-licenses for over 75s to the BBC from 2018. Around four million pensioners receive free TV-licenses. For this to continue, it would cost the BBC £1.35bn to fund in the first three years, then £750m a year thereafter.

We oppose the Government’s transfer responsibility for the policy to the BBC from 2018. We fear the BBC will find its cost unaffordable and will gradually fade out this policy in the medium to long term.

Contact

If you would like any more information about the LLA policy positions, please contact Tristan Westgate at laterlife@connectpa.co.uk or call him on 020 7592 9592.

LLA is calling for

  • A clear commitment to retain universal benefits
  • A clear commitment not to means-test universal benefits
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