Caroline Abrahams, Charity Director of Age UK, sheds light on the harsh cuts to Winter Fuel Payments impacting disabled pensioners, revealing the financial strain and emotional turmoil they face. Vix Rodwell, Director of Ipsy, discusses the barriers self-employed individuals encounter in contributing to pensions, advocating for better support and reforms. They also explore the complexities of inheritance tax and the government's rising revenue concerns, prompting a vital conversation about financial security for vulnerable populations.
The cut in Winter Fuel Payments significantly affects disabled pensioners, highlighting the need for targeted government support for vulnerable individuals facing higher energy costs.
Only a small fraction of estates face inheritance tax, but rising property values and potential government changes could disproportionately affect wealthier individuals.
Deep dives
Impact of Disability on Energy Costs
Many disabled pensioners face significant financial strain due to the loss of winter fuel payments, which can amount to £200 essential for covering increased energy bills. This situation arises particularly for those like Anne and Albert, a couple in their 70s, who, despite their medical needs and difficulties, do not qualify for pension credit due to small private pensions. They described the difficult choices they have to make, such as prioritizing heating over clean clothes and risking dampness due to increased laundry. Their story highlights the emotional and physical toll of financial insecurity on vulnerable individuals, emphasizing the pressing need for better targeted support from the government.
Challenges of Self-Employment and Pensions
Only one in five self-employed individuals make contributions to a personal pension, and many struggle with the complexity of setting one up due to variable incomes and lack of guidance. Ed, a cabinetmaker in his early 40s, expressed his previous difficulties in finding a suitable pension product, which led him to delay saving for retirement until later in life. Despite now establishing a pension plan, he regrets not acting sooner, showcasing the financial ramifications of starting late. The discussion emphasizes the need for clearer resources and structures that facilitate pension contributions for self-employed individuals, similar to automatic enrollment for employees.
Inheritance Tax and Public Perception
Despite being labeled the 'most hated tax,' inheritance tax affects a small fraction of estates, with a mere one in 20 estates liable for it in the current year. Many are concerned with rising property values and potential government changes that could increase tax revenue from this area, particularly as recent statistics show a record collection of £7.7 billion in inheritance tax. The discussion highlights public misunderstandings regarding the tax threshold, with potential changes such as reducing thresholds or removing reliefs for business and agricultural properties. These changes, if implemented, could raise significant funds but may predominantly impact wealthier individuals, leaving the implications for average citizens uncertain.
Hundreds of thousands of disabled pensioners will be unfairly impacted by the cut in Winter Fuel Payment, according to two leading charities who've spoken exclusively to Money Box. Disability Rights UK and Age UK have both told us that disabled pensioners often have higher energy bills because of medical needs and sharp cuts to the number of people receiving the payment will disproportionally affect them more than others. The government says it's committed to giving pensioners the dignity and security they deserve in retirement but says given the state of the public finances its inherited it’s right that it targets support to those who need it most. It says its protecting disabled pensioners through extra disability benefits such as Attendance Allowance, Disability Living Allowance and Personal Independence Payments. And that over a million pensioners will also continue to receive the Winter Fuel Payment and those on the full new State Pension will receive over £400 boost through the triple lock.
How might the Chancellor target Inheritance Tax in the upcoming Budget? Latest figures show that the government received a record £7.7 billion from IHT in the 12 months to July, up over 5% on a year before.
And, what can be done to encourage self-employed people to pay into a pension?
Presenter: Paul Lewis
Reporter: Dan Whitworth
Researchers: Catherine Lund and Jo Krasner
Editor: Jess Quayle
(First broadcast 12pm Saturday 14th September 2024)
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