Retirees should lose free TV licences, state pension triple lock - and pay National Insurance, says Lords committee

25 April 2019
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A report from the House of Lords Committee on Intergenerational Fairness and Provision has made wide-ranging recommendations on benefits for the elderly, calling for much of the help for older generations to be curtailed.

It has called for the free TV Licence for over-75s to be phased out, and for the state pension triple lock to be ditched.

The report has also criticised Winter Fuel Payments and older person’s bus passes, calling for both benefits to be only made available five years after state pension age, and treated as taxable income.

The committee has also attacked the National Insurance system as unfair, and says individuals over the state pension age should pay.

It also makes recommendations for reform of council tax, stamp duty and inheritance tax. 

The committee has published these recommendations as part of a wide-ranging look at government rules and policies in order to "deliver a fairer society" and support younger generations better. 

The chair of the committee, Lord True, comments: "We found that intergenerational bonds are still strong, and the evidence suggested both young and older people recognise the contribution the other makes and the challenges they face.

"However, there is a risk that those connections could be undermined if the Government does not get a grip on key issues such as access to housing, secure employment and fairness in tax and benefits."

National Insurance

The National Insurance system “functions poorly” as National Insurance Contributions (NICs) do not directly pay for the state pension, nor are they linked to any actual rules on the size of state pension payments, according to the committee.

The report says it is unfair that only those of working age pay the tax, and that those over state pension age should also contribute.

The committee says NICs should be merged into the income tax system, and that this would protect vulnerable older people from having to pay as contributions would be weighed against income.

David Sinclair, director of the International Longevity Centre – UK (ILC) comments: "The National Insurance exemption for older workers seems an anachronism. And savings could be better invested in any number of other initiatives – including in addressing the gross underfunding of public health and social care.

"Pensioner benefits are a matter of increasing political debate. While there is a strong case for universal pensioner benefits, it is also perfectly reasonable that these benefits should be taxed, so that those who can afford to pay do.”

State pension triple lock

The committee has called for the state pension triple lock to be abolished and instead increased alongside average workers' pay.

The report states: “The triple lock for the State Pension should be removed. The State Pension should be uprated in line with average earnings to ensure parity with working people.

“However, there should be protection against any unusually high periods of inflation in the future.”

Steven Cameron, pensions director at Aegon comments: “As the age profile and distribution of wealth of our population continues to change, it's critical that all government policies are considered through a lens of intergenerational fairness.

“The state pension triple lock has served its purpose of boosting the level of state pensions faster than average earnings but continuing it indefinitely is not financially sustainable."

Free TV Licences

The free TV Licence for over-75s has also been criticised. The report calls for the free TV licence to be phased out and those who can afford it should pay. It recommends that the government subsidise the poorest households instead.

The BBC is currently undergoing a consultation on whether or not to maintain the benefit as the cost is set to be passed to the corporation from the government in June 2020.

Bus passes and Winter Fuel Payments

The report also mentions the use of free bus passes for older people.

In London, Wales, Scotland and Northern Ireland the free bus pass begins at age 60 but for the rest of England it applies from the age of 65 and will increase in line with state pension age.

While the committee received criticism that the bus pass is accessible to some people who are still of working age, it conceded that there was an environmental case to be made to sustain it as the free bus pass encourages older people to use public transport instead of motor vehicles.

Winter Fuel Payments also come under the microscope.

The report says that the payments are “not well targeted.” It argues that single parents of working age are much more likely than single people or couples over the age of 60 to be in ‘fuel poverty’ and it therefore unfair that these households receive a subsidy to pay energy bills.

In both the case of Winter Fuel Payments and the free buss pass the committee recommends that people should not be given access to the benefit more than five years after reaching state pension age.

However, it recommends that transitional arrangements be put in place to protect those already in receipt of the benefit, who might lose out from rule changes.

It also says the government should look at treating these benefits as taxable income for those above the personal allowance threshold (currently £12,500 per year).

Mr Cameron adds: “With the Baby Boomer generation now above age 55 and increasingly in retirement, it's right to consider if blanket benefits for older generations remain appropriate or if the cost of funding these is falling disproportionately on younger workers.

“The average income of a pensioner couple is now £454 a week which means that incomes are now around 70% of non-retired households. This represents a huge change over recent decades and the stereotype of retirement as a time of constant thrift is largely outdated.

"Pensioner incomes have steadily risen as a result of factors like the provision of defined benefit pensions, increases in the state pension and strong performance of property prices and investments.

“However, while pensioners are on average better off this hides big discrepancies and across the country there are still many older people who struggle with fixed costs like heating bills. Some universal benefits like a free TV licence for wealthy pensioners do look hard to justify but the government should proceed with caution when it comes to reform of areas like the state pension.

"Some of the factors that have boosted pensioner incomes in recent years like defined benefit pension provision will not last forever as employers increasingly switch to less generous alternatives and any change could have significant consequences in the years to come.”

Inheritance, council and property taxes

The committee also makes recommendations for changes to council tax, inheritance tax and other property taxes such as stamp duty.

The report accuses council tax of being an "incoherent combination of a property tax and a service charge." It recommends council tax more closely reflect property values than it currently does, plus a system that allows those with high property values but low incomes to delay payment until the sale of a property. 

It also says second homes should be subject to pay a full rate of local tax.

Stamp duty has "seriously distorted" the housing market according to the committee. It calls on the government to review the system and its effect on housing market liquidity, and consider how it can be reformed to improve housing choices and availability for young families. 

Finally, the report accuses inheritance tax of being "capricious" and unfit for purpose. It recommends reviewing whether and how assets should be taxed on death or transfer to ensure greate intergenerational fairness.

Comments

In reply to by anonymous_stub (not verified)

Why do the people in the government and in the house of lords insist on playing this game of there's, by putting views into the media that the younger generation are worse off than pensioners and by removing bus passes and winter fuel allowance and introducing another pensioners stealth tax, that this money would then go to help this younger generation, ABSOLUTE BUNKUM. As pensioners we have paid into the system all of our lives knowing that we would be retireing at 60 for a woman and 65 for a man, the government moved the goal post without a blink of an eye all because they say that people are living longer, that may be true in some circumstances but not in areas where the baby boom generation had to toil and graft all of their lives to support their families. It's an absolute disgrace that the house of lords dare even consider putting forward any changes, their demise will be of there own doing.

In reply to by JohnRob (not verified)

And they don’t pay tax on that! Their average take home pay is more than £83,000 a year for 141 days attendance, I won’t say work because they don’t and the majority have never had a real job and in particular Lord True.

In reply to by Katie Barnes (not verified)

Exactly I think that the house of Lords would want the oaps to freeze to death to save the economy. Do away with the antiquated Lords that would save money and people's, oaps lives

In reply to by Tracey warren (not verified)

I agree they have no idea of the hardship many older people are suffering along with my age group (64)

In reply to by Tracey warren (not verified)

Get rid of the lords the are blood suckers why do we need all these llords abd mps as well one house is ebough also we have to many royals and norr on the way

In reply to by Annabel (not verified)

Here here , you are not alone

In reply to by Annabel (not verified)

Agree, I was supposed to have state pension age 60 , would have been ok with that and work pension which was not high as I worked part time to care for our children. Our aim was to be able to retire at 60 and 65 and have a reasonable quality of life.Helped support children in university, now they are struggling to get a suitable home at a sensible price. I have also helped family members through difficult times.eg siblings and parents.I am unfortunately suffering Ill health which means I am unable to continue my career, which is heavy and demanding I would have been unable to continue to age 66 even if well.Our parents live 150 miles away in different directions,it is difficult and expensive to travel to them and give support as required,we and they got on our bikes as advised by the government but as age goes on it is difficult to commute to see them.We have never had any benefits or help and feel so many people are in this position.Younger people are having difficulty getting jobs as older people keep working when they can.Stop moving the goalposts,we have worked hard to get this far.

Pensions

As. A pensioner. My self luckily not one with thousands in the bank I do know of some. Who have and the comments I get from them is that as the pensions only increase by the CPI revert thing goes up by the CPI including car taxes mobile phone company's and also my ground rent increases every year by theRPI means every year prices go up and will always be left than what you had before and is time something was done about it check. for yourself how much worse off you will be.

Pension

I am dreading reaching 66, 8 years away, although I could be lucky and the world may have come to an end by then. Being more serious though, the House of Lords really needs looking at, but as I understand it they are a law unto themselves and they cannot be disbanded.
I grew up in the 70's and brought our house in the 80's we went without for years to pay for it, so it really gets my goat when I keep hearing how hard the young people have it now.

Old age and benefits

State pension age should be 70 years old, and benefits paid from when someone is 70.
Bus passes, fuel payments, and free subscription should only be paid to those over 70. Television licences, should be free to those over 80, and half price to those over 70.
If someone is working, they should pay National Insurance contributions whilst they are working even over pension age. This would help them to contribute until they have to stop. This would help with social care.
The government should provide social care. All local authorities should have care homes, They always used to have 10 years ago. Mr Cameron is the main problem as this is where most of the cuts etc came from. People should be able to pay something towards their costs. can go if they are unable to afford to pay,or pay something towards it.
There should be no threshold.
Other than that, people should have an insurance policy to cover their care if they do not want their assets touched.
Transport infra structure must be good, if they want older people to stop driving at a certain age. ie proper bus services in all areas.

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