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

Published by Edmund Greaves on 25 April 2019.
Last updated on 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.

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I certainly don't receive 450

I certainly don't receive 450 £ a week...I hadn't to cash in my private pension because of the hike in women's age ....I receive the 172 a week and still work !!!

Funny how people with more

Funny how people with more money always seem to think that the less well off can manage on even less

Must agree Robin, lets close

Must agree Robin, lets close down the House of Lords, as the House of Commons can do enough to keep the working class working to afford to pay these coffin dodgers.

Robin you are so right, just

Robin you are so right, just like directors of companies they are told of the tree and they still think it's there god dam right to pilfer from the people under them, i.e. dip into the pension pot that has been put into for when people come to the end of their working career, only to find the bosses have embezzled in to it, and what more there is No law to bring them to task.

Where did such an impossibly

Where did such an impossibly meaningful word as 'intergenerational,' come from. The generations can not be and were never intended to be comparatively fair. It's why we strive to get on in life that the differences between the economic statuses emerge as between the different age groups. The Lords consideration of all this is a non sequitur.

How about axing the

How about axing the undemocratic house of Lord's. Save a nice bit then, greedy self important people.

So agree Maureen , shame on

So agree Maureen , shame on them all

Yes yes yes, wholeheartedly

Yes yes yes, wholeheartedly agree with your comments.

I agree, its the same thing

I agree, its the same thing all the time the rich politicians who Squirrel away there wealth that we actually give them in the first place.
There money is in tax exempt off shore banks.
The Lords is just an excuse of an old peoples home which incidentally they will never have to suffer.
They F**k everything up and we have to pay for it.

Hit the nail on the head

Hit the nail on the head there!!

Fully agree

Fully agree

Best thing that could happen

Best thing that could happen to these self serving grasping people who think they're better than the real hard working people of this country.

After working and paying my

After working and paying my taxes for taxes years.My state pension will be 5.5 years later how unfair is that so I have been looking forward to a free bus pass and future fuel payments not all of us are as well of as those MPs i n house of lords and commons

Exactly I think that the

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

What on earth is going on im

What on earth is going on im 65 we are the generation who have paid tax ,NIC all our working lives ,high mortgage repayment TAXED at 15% in the 70s,80 etc the list goes on it was a struggle to keep a home ,pay bills then and now entering our senior years ,The government are wanting to continue and penalise us more .There are an awful.lot of younger people who don.t want to work and just claim benefits and see it as there right to do so ,i can go on but this latest report by the lords committee is just totally unfair it won.t concern them one bit as they are wealthy anyway .Sort out brexit get the country together and leave the people who are entitled to a decent living in retirement having paid there dues alone .

I agree totally, what you are

I agree totally, what you are saying why should the rich get richer and the poor get poorer. I think they should try and live on what we get weekly.

If they must means test these

If they must means test these benefits they should be available to all people who have income lower than the higher rate tax payer. Just making them available to people on pensions credit means people just above or who dont claim pensions credit miss out. But the fairer option would be as stated above to pay people with income below the higher rate tax payer.

I'm 60, struggling to keep

I'm 60, struggling to keep working with severe debilitating arthritis and looking after elderly parents to avoid them entering the care home. Financially, I'm also supporting millennial children. I looked forward to retiring but everytime I get a little closer the goalposts move further away. Always worked, never had benefits or any help ever. The Government can just shove this up their Jackseat! Gonna go for everything I can now, fed up with toeing the line, doing the right thing, being flogged to death and taken for a ride. Good luck Government, the Boomers are not the Silent generation you could walk over .

Here here , you are not alone

Here here , you are not alone

Agree, I was supposed to have

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.