Winter fuel payment

PoliticsNerd. It isn’t necessary now or in the near future.

NIC is ring fenced. It funds only two things. An annual allocation to the NHS (33.5 billion in 2023/24) and contributory benefits.

Around 95% of the contributory benefits it funds is the State Pension - around £124 billion of the £130 billion paid out in 2023/24. The rest is maternity and bereavement benefits, the contributory elements of ESA and JSA plus some miscellaneous and admin costs.

There was a credit balance of over £86 billion sitting in the NIF at 31 March 2024. HMRC need only keep in reserve about a third of that as an emergency contingency. The reserve is invested and earned interest of almost £4 billion in 2023/24.

Jeremy Hunt’s pre-election NIC cut will absorb £10 billion of the reserve. Rachel Reeves 25 billion employer’s NIC increase is to provide additional funds for the NHS.

GAD say: Contribution income is now estimated to exceed benefit expenditure in every subsequent year of the projection period [to 2030], resulting in an increasing fund balance.

It does say that the Fund faces longer term challenges. Most significantly, the projected increase in the number of state pension recipients, relative to the working age population together with the operation of the triple lock, were expected to increase Fund expenditure relative to income. These demographic factors are still likely to lead to a reducing Fund balance in the long term.”

I think that's over-exaggerated. Currently the number of people reaching SP age each year is around 700,000 while around 600,000 existing pensioners die each year. Many of the latter will have been receiving higher two tier pensions (enhanced by SERPS/SSP) compared to new pensioners have only the single tier pension. Moneybox’s Paul Lewis has explained many times that the average pension paid under the old system is higher that that paid under the new.

While we have the system that we have, where employees have no alternative but to pay into a ring-fenced fund for up to 50 years, then they should be entitled to a pension at the end of it whatever their other means.

As a relatively recent retiree, having paid into the fund for 50 years (only 35 of which count towards a State Pension), I’d be hacked off if the government said they were now going to means-test and because I’d also been paying into a works pension scheme for 50 years, I couldn’t have a State Pension.

Pension funds are very vulnerable to market shocks. They came close to failure as a result of the Truss/Kwarteng budget and would very likely fail altogether under Reform’s fag packet economics as the nitwits want to abolish QE.

In that eventuality, what would be the backup plan if 13 million people did not have a State Pension to fall back on?

growstuff

Thank you.

What income/assets are taken into account in the Australian means-testing?

PS. UK employers currently pay 15% NICs over £5000.

www.servicesaustralia.gov.au/income-test-for-age-pension?context=22526#:~:text=We%20assess%20your%20and%20your,income%20you've%20been%20paid.

PS. UK employers currently pay 15% NICs over £5000.
I think the whole 11.5% goes into the employee's personal superannuation fund, but this will give more information.
www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super

Michael Gove suggested that they don't pay it to those who pay the higher rate (40%) tax. That includes me and Mr RLW, (just) but seems the fairest way of dealing with it to me. Whatever they do, there will always be those who are just over the threshold, but that's how it is with any means tested benefit.

As someone said upthread, income tax is only payable on interest and income, not savings, so those who have a nest egg for possible future care (as we do) won't be affected.

Thank you.

What income/assets are taken into account in the Australian means-testing?

PS. UK employers currently pay 15% NICs over £5000.

growstuff

PoliticsNerd Correct me if I'm wrong, but I don't think Australians pay anything like National Insurance. What you're suggesting is that higher earners pay more into the system via National Insurance, but receive less. I think there would be a backlash. People who have paid National Insurance all their lives already receive very little more than others who haven't paid into the system but receive Pension Credit and other top ups.

Australians pay more tax than the UK. Employers have to pay 11.5% of salary into an employee's pension fund.
Government Age Pensions are means-tested and graduated.
Self-employed have to pay into their own pension funds.

The 11.5% is taken from employers even for casual workers such as backpackers, who can then reclaim that money when they leave the country.

Doodledog

Fair enough, but it's going back several generations. and this is an important development for 'grans'.

🤔
My DGC have only just left primary school.

Anyway, as you were!

PoliticsNerd Correct me if I'm wrong, but I don't think Australians pay anything like National Insurance. What you're suggesting is that higher earners pay more into the system via National Insurance, but receive less. I think there would be a backlash. People who have paid National Insurance all their lives already receive very little more than others who haven't paid into the system but receive Pension Credit and other top ups.

Wyllow3

Major thread drift...

All part of the vagaries and fun of Gransnet 😂

I have always thought we would have to move to a means-tested pension in the hear future (much like the Australian system). I have also assumed that those getting a state pension currently would stay on the one they were getting.

What would happen if you laid out the plans for a means-tested pension starting immediately with new pensioners, moving those on Pension Credit onto it and offerering to move anyone who requested it, over to the means tested one having laid out what the means-tested one would give them.

It could afford to be higher than Pension Credit as fewer people would receive it. This is more a question than an answer.

I understand but it's always worth checking the numbers. I switched to Octopus last autumn as they don't charge exit fees if you want to switch out again before the year is out.

They are currently offering 12M Fixed May 2025 v2 which is only very marginally more than the one I'm on - less than £1 a month more to fix for another year. I'll be keeping an eye on what's offered once the new lower cap is announced.

Apologies for causing a thread drift. I wanted to say how other countries look after their seniors better than the UK does. And to add now that Norway used their north sea oil resources and income far better than we did to the advantage of Norwegians.

M0nica

I cannot see that using the tax band of someone's house is a fair way of deciding who gets WFA and who doesn't, I assume Martyn Lewis was assuming a low tax band for a property equated with a lower income.

However, nowadays when many older people downsize to a smaller property, a house or a flat, possibly in a retirement complex, then they are going to be in lower tax band properties, even though they have very comfortable incomes and possibly, significant savings and investments.

I think the property idea is flawed too Monica. I also think it's madness to give £200 or £300 to someone with millions or billions in the bank. Universal benefits can work but it depends on the scope, design, and the population they are design for.

*Silverbrooks link has one suggestion worth considering:

Make PC more generous. PC could be made more generous – for example, rather than reducing PC by £1 for every £1 of income, it could be withdrawn more slowly. This would entitle more – still fairly low-income – households to PC and hence WFP. The cost of this would be substantial as those already entitled to PC would become entitled to more of it.

But where does that money come from when we were left, quite despicably, with a terrible financial legacy by the last Government.

Silverbrooks The reason I didn't fix earlier this year is that I'm probably going to move house in the summer. My energy bills aren't that high anyway.

growstuff

You're not an outlier Silverbrooks. My May usage for gas and electricity (17 days since my last bill) is £36.96, so it's just over £2 a day. The standing charge is about a third of the total.

My water/waste bill is less than £30 a month. I think £1 a day for providing clean water and disposing of my waste is a bargain.

Thanks growstuff

I am so glad I took Martin Lewis's advice to fix last autumn. His latest infographic, to tie in with the expected drop in the cap still, shows how much better it is to have fixed.

I hope everyone knows about the MSE Cheap Energy Club which finds the best deal for consumers. It's very easy to use once you have made a note of your annual usage numbers for each fuel.

Martin Lewis: Energy Price Cap announcement tomorrow likely to say it'll drop 6 - 8% on 1 July. Yet it'll still be a Pants Cap. At every point over the last year, you'd have been better off getting the cheapest 12mth fix (in my new infographic, the rainbow line is fixed price, then faint line runs forward a year so you can see how it compares) Currently the cheapest fix is 18% less than the Price Cap, so very likely (if predictions are correct) to massively undercut the Cap. You can find your cheapest (it depends on use & region) via cheapenergyclub.com

Fair enough, but it's going back several generations. and this is an important development for 'grans'.

Major thread drift...

I'm sorry if I've missed a step, but what have forest schools to do with WFP?

Wonderful schools! I wish it was like that for many more.

MayBee70

My first thought re the children was with so many layers what happens when they need the toilet. Ditto the adults, too [I always think that about arctic expeditions too but then it's probably down to my ibs].

Perhaps they have two-pieces for the younger pupils!!

Both primary schools my grandchildren attend have Forrest schools. One has goats, hens, ducks/pond, Shetland pony and more. The children have outdoor kit ready in the cloakroom and are involved daily in feeding the animals 🌞

MayBee70

My first thought re the children was with so many layers what happens when they need the toilet. Ditto the adults, too [I always think that about arctic expeditions too but then it's probably down to my ibs].

Not only layers, I think that about anyone in a jumpsuit😲🤭

Mollygo

I’m watching that HelterSkelter1.
My first thoughts, when I watched the forest schools section were
That the children were properly clothed for the weather.
That the teachers could let the children take risks without the fear of being attacked by parents.

We have forest schools at lots of schools in the UK too.
E.g. We have a woodland area as part of our school grounds where children go to carry out activities like pond dipping, habitat investigation or simply observing the changing woodland scenery.
But we have to keep outdoor clothing for those children whose parents “forget it’s forest schools week” or complain bitterly if their child is sent out to play when the weather may be showery.
I noticed that despite not starting “formal” education, they were doing letter recognition activities with the young children.
Most of all I noticed the ratio of adults to children.
I can’t say whether all children there are happier and healthier, because they wouldn’t be showing us any that weren’t would they?
Looking forward to the other programs.

Yes, they had Forest Schools at my DGDs' primary school; they were lucky in that it was a rural school with quite extensive grounds. They kept all-in-one waterproofs for all the children.

They let them out to play in the snow, too, making sure they had the waterproof overalls on over their other clothes so they could make snow angels.

I don't know if many other primary schools do this.

My first thought re the children was with so many layers what happens when they need the toilet. Ditto the adults, too [I always think that about arctic expeditions too but then it's probably down to my ibs].

I’m watching that HelterSkelter1.
My first thoughts, when I watched the forest schools section were
That the children were properly clothed for the weather.
That the teachers could let the children take risks without the fear of being attacked by parents.

We have forest schools at lots of schools in the UK too.
E.g. We have a woodland area as part of our school grounds where children go to carry out activities like pond dipping, habitat investigation or simply observing the changing woodland scenery.
But we have to keep outdoor clothing for those children whose parents “forget it’s forest schools week” or complain bitterly if their child is sent out to play when the weather may be showery.
I noticed that despite not starting “formal” education, they were doing letter recognition activities with the young children.
Most of all I noticed the ratio of adults to children.
I can’t say whether all children there are happier and healthier, because they wouldn’t be showing us any that weren’t would they?
Looking forward to the other programs.

I think they are always aware of the threat from next door.
Of course, at one time much of Finland was part of Sweden for hundreds of years and the West is particularly Swedish in culture. Then Russia invaded and Finland only became independent in 1917.