Following the Government’s decision to axe Winter Fuel Payments for millions, we explore other pensioner benefits that could be under threat in the Autumn Budget.
For many older people, the Winter Fuel Payment – worth up to £300 per year – provides a financial lifeline during the colder months.
Unsurprisingly, the Government’s move to scrap these payments for most pensioners will come as a huge financial blow this Winter.
More worryingly, there is speculation that other pensioner benefits could also be slashed in the Autumn Budget.
Here, we look at three perks rumoured to be in jeopardy that could directly impact those in or near retirement.
880,000 STILL missing out on £3,900 – are you eligible?
1. Single Person Discount on Council Tax at risk?
As Council Tax remains one of the most hotly debated topics since Labour came to power, political commentators are eager to see what the Chancellor has in store next month.
One rumour is that Rachel Reeves will axe the Single Person Discount, which currently offers a 25% reduction for those living alone.
If this move goes ahead, critics argue that it would disproportionately punish pensioners, with high numbers of older people living by themselves.
According to statistics from Age UK, there are 3.6 million older people living alone in the UK, with two million over the age of 75.
Of course, this is far from the only rumoured change, with others suggesting that the Government may be preparing to scrap current property bands.
There has been speculation that households could instead pay a 0.5% tax on their property’s value each year.
Such a move could be particularly tough for retired people living in areas where property prices are high, such as London and the South East.
Although these retirees live in high-value homes, many are on fixed incomes, which could make these payments unaffordable.
Protect your money ahead of the Budget
2. A cut to tax-free lump sums?
At present, people can take up to 25% of their personal or workplace pension as a tax-free lump sum when they reach the age of 55 – rising to 57 in 2028.
The current system allows pensioners to take up to £286,275 before they start paying tax.
However, think tank the Institute for Fiscal Studies (IFS) has urged the Government to place a £100,000 cap on the amount people can claim, arguing that the move would affect roughly one in five pensioners.
The IFS also suggested this change could save the Treasury approximately £2 billion and help to plug what the Government has identified as a £22 billion “black hole” in public finances.
3. Tax relief on pension saving
As the Budget draws nearer, speculation is also rife that the Chancellor may target tax relief on retirement savings.
Under current rules, the amount of relief savers receive when paying into a pension is determined by their Income Tax bracket.
For Basic Rate taxpayers, contributions are topped up by 20%, meaning that a £100 contribution costs £80. Higher Rate taxpayers get 40% relief and Additional Rate taxpayers receive 45%.
In 2016, then-backbencher Rachel Reeves expressed support for a flat rate of 33% relief for all savers.
Since coming to power, however, the Government has stated that this is not part of its policy and does not reflect the Chancellor’s current stance.
What about the State Pension age?
At the time of writing, the State Pension age is 66, with plans to increase it to 67 between 2026 and 2028, and to 68 between 2044 and 2046.
However, the London School of Economics’ Centre for Economic Performance recently suggested that the retirement age should rise to 68 “as soon as possible”.
In effect, this would mean that Brits would need to wait longer to receive any perks tied to the State Pension age.
While we can’t rule out an accelerated timetable, any immediate change seems unlikely.
Bringing such a change into law would undoubtedly take years, and the Government would likely want to give savers adequate time to prepare.
Otherwise, it could risk another scandal akin to the WASPI women controversy.
6 reasons your pension might be worth less than you think
Have your say
Do you worry that the Government may be about to launch an attack on pensioner perks in the Budget?
Perhaps you think there is no other choice given the state of public finances.
We’d love to hear your thoughts in the comments below.