From Ros Altmann:economist and pensions,
    investment and retirement policy expert

  • pensionsandsavings.com

    Pensioners need emergency Manifesto this winter as inflation soars but pensions lag behind

    Pensioners need emergency Manifesto this winter as inflation soars but pensions lag behind

    • Pensioners facing a perfect storm this Winter as fuel prices and inflation soar but pensions fail to keep up. 
    • Government should consider an emergency manifesto to address the living cost crisis for elderly citizens who are most vulnerable to the cold this winter.   
    • Government response must include urgent plans to increase Pension Credit take-up and enable pensioners to afford to heat their homes with reduced prices or increased benefits. 
    • Excess winter deaths among the elderly have averaged tens of thousands each year, but without more help, the numbers suffering or dying this winter are likely to rise sharply. 

    Pensioners are facing a perfect storm this Winter. As so many remain isolated due to Covid fears and their living costs have soared due to rising energy and food prices, they are at increased risk of illness and death without emergency help.

    Every winter, tens of thousands of pensioners die, often due to respiratory illnesses caused by the colder weather. With the lowest state pension in the developed world and older people needing to keep warmer than the young, the costs of home heating and basic bills mean that the elderly tend to succumb to bad weather in large numbers, even in a normal year.

    But this winter is far from normal, partly due to Covid isolation but importantly because of the sharp spike in heating bills: Ofgem’s increase in the energy price cap in October has already hit many pensioners. Further price rises are in the pipeline for the months ahead.  This poses particular risks for Britain’s pensioners, who are already struggling to live on the lowest state pension in the developed world and many of whom have little or no additional help. Pensioners are particularly susceptible to the cold and need to keep warmer than the young.

    Over 2 million pensioners were in poverty and over a million in extreme fuel poverty before the pandemic:  The ONS estimates from before the pandemic showed that over 2 million pensioners were in poverty and over one million were estimated to be suffering extreme fuel poverty. The rise in heating bills and the meagre 3.1% increase in State Pensions next April, following the Government’s decision to abandon its triple lock Manifesto promise, will leave more pensioners living on inadequate incomes.

    Thousands of pensioners’ lives may be at risk: Official calculations show ‘excess winter deaths’ among older citizens averaged over 20,000 a year in recent years. Clearly, a substantial energy price increase will plunge more pensioners into extreme fuel poverty and risks rising death rates.

    So far, there has been no official recognition of the plight of even the poorest pensioners: The elderly will struggle to survive through the winter as their heating bills rocket. It is time for a national emergency plan to help them survive the tough times ahead.  Here are my suggestions for a Pensioner Winter Manifesto to try to address some of the worst affected and save lives.

    Government should find a way to make up for abandoning the State Pension triple lock earnings link promise: It is important for the Government to recognise that its decision to abandon the Manifesto commitment to increase State Pensions in line at least with earnings and also to remove the earnings link from Pension Credit which the poorest pensioners depend on will cause significant hardship. An emergency plan to help the elderly, especially the poorest, with their heating bills this Winter, would at least partly offset this decision.

    1. Government action and a national campaign to increase take-up of Pension Credit State Pension top-up to get extra money to poorest pensioners.
    2. Consider offering Pension Credit to all over 60s, especially those in poor health this Winter.
    3. Increase benefits that help with heating – Winter Fuel Payments are lower than in 2009. Cold Weather Payments of £25 a week have not risen since 2008. Warm Homes Discount of £140 a year has not increased for over ten years.
    4. DWP must accelerate its programme to identify pensioners who are being underpaid and urgently reimburse them, particularly women and the over 80s who are most at risk of fuel poverty
    5. Encourage family, friends and neighbours to check on the elderly and ensure they can manage to stay warm and well fed.

    Increase take-up of the State Pension top-up (Pension Credit) with automatic payments or national media campaign: Since 2010, around 4 in 10 pensioners who are eligible for Pension Credit are not receiving it. This is the lowest take-up rate of all means-tested benefits and reflects the reluctance of pensioners to claim extra help. They are often too proud and do not realise this is their right, not a handout. Latest figures show that more than one million pensioners (920,000 pensioner households) miss out on this top up for their State Pension, which can be worth thousands of extra pounds a year. The DWP and HMRC could work together to identify those who are entitled to an increase in payments, rather than waiting for people to claim.  Calling the Pension Credit a ‘state pension top-up’ and helping pensioners understand that the money is their right, with a national advertising campaign on radio, television, mainstream press and social media is urgently required to raise awareness.

    Pension Credit should be made available to more older households:  In recent years, the eligibility criteria for Pension Credit have been significantly tightened. The age at which Pension Credit can be claimed has risen from age 60 in line with rise in women’s State Pension Age and the rules now require all household members to be over state pension age before claiming Pension Credit. That means many pensioners who would previously have been able to receive extra help with their living costs are no longer able to do so. Rather than being available to any household with one person over age 60, Pension Credit will only be paid if both members were born before September 1955 (around age 66). This will increase the risk to the elderly people who have a younger partner caring for them, who cannot work and is no longer eligible for extra State Pension top-ups as they would have been in the past.

    DWP should accelerate efforts to find and reimburse all pensioners who have been underpaid: In addition to this, the DWP has been underpaying thousands of pensioners for many years and has still not found out who these people are, nor ensured they receive the backpayments due to them. This exercise should be accelerated.  All the over 80s, who are not receiving their full £82.45 in Category D pensions, should be contacted to get them their extra payments.

    Increase the existing benefits that help with fuel costs – Winter Fuel Payment, Cold Weather Payment, Warm Homes Discount: Government already has some benefits to help people with their fuel costs, but these are in urgent need of updating.  Winter Fuel Payments, Cold Weather Payments and Warm Homes Discount have either been reduced or stayed the same over the past years.  They could be increased for pensioners, to reflect the rise in heating bills.

    • Winter Fuel Payment is lower than in 2009 and has remained the same for ten years after being cut in 2011. When first introduced, Winter Fuel Payments for pensioner households went to all over 60s. In 2009, households with someone aged 60 – 79 received £250 tax-free each winter, while the over 80s were paid £400 tax-free. In 2011, this was reduced to £200 for households with someone over age 60 and £300 for over 80s, Since then, the eligibility age has risen, while the amount has not increased to reflect rising fuel costs.
    • Warm Home Discount has stayed at £140 for over ten years: This benefit is offered to those living on certain means-tested benefits, including Pension Credit, and provides a discount on their heating bills. It was introduced in 2011 and offers a discount of £140 to those benefit recipients.  This sum has not changed for over ten years and, although the Government is consulting on extending the coverage for younger households, there is no plan to provide extra help for pensioners.
    • Cold Weather Payments have been frozen at £25 a week since 2008: This benefit was introduced in 1986 to provide extra money for the poorest citizens when weather conditions turned exceedingly cold. During the months November to March, if a successive period of 7 days sees temperatures below freezing, a Cold Weather Payment can be claimed.  It was increased to £25 a week in 2008, and has remained the same ever since, despite rising inflation.

    Encourage family, friends and neighbours to keep in touch with older people to check they are warm enough and eating well: I would urge all family, friends and neighbours of older people to check on them, ensure they are able to heat their homes and buy the food they need to keep safe through the winter.  So many will be at risk and have been cut off from their loved ones or usual sources of support due to Covid.

    Links to official statistics showing pensioner poverty: https://www.gov.uk/government/statistics/households-below-average-income-for-financial-years-ending-1995-to-2020/households-below-average-income-an-analysis-of-the-income-distribution-fye-1995-to-fye-2020

    DWP (25 March 2021). Households below average income: for financial years ending 1995 to 2020 as above. Summary Results, including Table 1.6b and Table 6.5 and Table 6.11

    2 thoughts on “Pensioners need emergency Manifesto this winter as inflation soars but pensions lag behind

    1. I commend you on making these points but I couldn’t disagree more.

      You make no reference to many of the last few years where we have been in a low inflationary environment yet state pensions have risen by significant amounts.

      You may no reference to the logic, the common sense view, which says that after a year where salaries fell due to the pandemic and then simply rebounded, why should a quirk of the formula and circumstance give pensioners a massive boost when the country can ill-afford it.

      I also find your use of the word meagre in respect of a 3% rise quite offensive. There are many many people not getting increases like that this year, all facing similar challenges.

      I am not denying that we are entering a difficult year regarding the cost of living, but it will be tough for many many people (non pensioners, and pensioners) and we have to use the resources we have In the most efficient way possible.

      the government made the correct decision in my view.

    2. Dear Baroness Altmann
      On behalf of all the UK Pensioners thank you for your continued efforts its not easy surviving on £179 or less which is the norm today for most OAPs. This Government and PM seem out of touch with reality in this regard thank you again for reminding them.

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