Chancellor Osborne is making swift changes to many benefit and welfare programs, not the least of which is the Winter Fuel Payment (WFP). Its clear that moving to a warmer country might make some sense to pensioners trying to keep warm, but with news that pensioners will have to give up their fuel payment to do that now, many may be having second thoughts. The WFP has defined a core target demographic: pensioners. However the mood for many programs aimed to help pensioners is now less generous. Benefits are being attacked as being unfair to the young who must shoulder a greater share of austerity measures than their elders. For that reason, there are changes coming up which may affect the fuel payments and more in the UK economy, starting with those pensioners who have moved abroad.
Testing and redefining eligibility
The â€œtemperature testâ€ for expatriates moving to warmer climates is just one change affecting the Winter Fuel Payment. Chancellor Osborne has made it clear that the program will be revised as necessary either eliminating it or increasing payments. Since the mood is likely to remain financially-gloomy, it is more likely that more restrictions will be put on payments, rather than less. One possible change could be a set age limit that makes the payment only eligible to those who are 70 or older. This will still help the core group of pensioners who are at risk the most from cold weather (75 and older). Right now, you only need to be a qualifying pensioner born on or before 5 July 1952. This would make the age limit 60, not 70. However, a quick dash of the pen and the rules can be changed overnight.
Could the payment be eliminated?
There is already some debate about eliminating the WFP for wealthier pensioners. Plans are being made to remove the payment for the top 5 per cent of wealthiest pensioners. Thats about 600,000 UK pensioners who may have their payments eliminated. Whether that actually happens depends on future decisions, but the call has already been made to eliminate the payments for at least the wealthiest pensioners. However, this has not happened so far, and may or may not happen in the future. If it does happen, it wont be as traumatic for the wealthier households than if the payments are eliminated for the middle- and low-income households instead. With more attention being paid to how much money is being spent on pensioners, its likely that some more changes will be made to the winter payments as well as other schemes, even if theyre not eliminated altogether.
Prepare for more cuts
The fuel payment is a cash payment that can be used at the recipients discretion. It is estimated only 41 per cent of it actually goes towards paying a fuel bill. Other types of strategies to help residents of the UK deal with more permanent solutions like reducing energy needs and making homes more energy efficient. While those strategies may cost more upfront, they yield savings every year afterwards. Thats why they may be of more importance to pensioners trying to get a handle on energy costs. By taking advantage of the other programs offered under the Green Deal, while theyre still available, a UK resident can upgrade energy appliances and modernize a home to make it less draughty. This can keep fuel bill costs down every year, not just the year they are implemented. In that respect, pensioners should probably seek to make as many beneficial changes to their energy consumption and realize that the winter payment may be getting ready to be phased out.
With the expansion of possible claims due to a recent court ruling including those who left the UK years ago (not just once they turned 60) to be eligible for the WFP, it leaves an enormous liability for the new government to fulfil. The temperature test may have eliminated some of those future claims, but it may be a payment that is due to come to the end of its life cycle as more and more claimants crowd the system. Citing the unsustainable nature of the payments, Chancellor Osborne has already opted to make significant changes. It is more than likely he will continue to do so to keep the government from spending too much on new claims it can no longer support.
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