Backing for call to scrap benefits for elderly
Non-cash benefits for the elderly should be abolished, the director general of the Institute of Economic Affairs has said.
Commenting on the call by Nick Clegg, Liberal Democrat leader, for wealthy pensioners to surrender age-related universal benefits, Mark Littlewood said: “All pensioners should surrender these benefits. Means-testing would be a bureaucratic nightmare and would not make savings for the government.
“The three non-cash benefits to pensioners should be abolished. The current system lacks any economic rationale.”
However Ros Altmann, director general of Saga, said: “If you start means-testing pensioner benefits, many of those who need help will not get it, as they won’t claim. It will cost huge sums in administration and you will be penalising those who have saved.
“The reason we have all these pensioner benefits is because our state pension is so low for so many people. Means-testing is complex, inefficient and costly in terms of administration and penalises those who have saved, whereas universal benefits for pensioners ensure all those who need them do receive what they should.”
Saga research earlier this year found:
■ 87 per cent of pensioners feel their bus passes were vital.
■ 90 per cent said the same about their winter fuel allowance.
■ More than 60 per cent said retaining universal pensioner benefits was fair.
Ms Altmann pointed out that the average net income for single pensioners was £11,630, and for pensioner couples £20,765 a year. The top 20 per cent of single pensioners have an average income of approximately £20,000 a year.
She said: “Where will this reducing pensioner incomes stop? Perhaps you could just as easily argue they don’t need a state pension.
“Mr Clegg’s hint that a Lib-Dem government would introduce more means-testing will put people off saving for retirement and leave many poorer pensioners without help.”
Tom McPhail, head of pensions for Bristol-based Hargreaves Lansdown, said: “I agree in principle with abolishing all the age-related benefits. However it should be offset with a substantial increase in the state pension.Bureaucracy is expensive and should be avoided wherever possible. Means-testing and age-related benefits both cost significant amounts of money to administer. Strip out the bureaucracy and pay the money directly to the pensioners.”
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