This piece first appeared in Saga Magazine in January 1999
The text here may not be identical to the published text
When more is less
Government plans for social security
Major changes in social security are planned by the Government and they will affect thousands of people over 50. Some will get more money - in some cases from April 1999. But others - including many people who are disabled or widowed in future - will get less.
WIDOWS
State benefits paid to men and women whose spouse dies after April 2001 will be very different from those that exist now. Under plans announced by the Government in mid-November there will be less help for people without dependent children but more help at the time of death and more help for the poorest widows. For the first time, men will have the same rights to benefit as women. Overall, the new rules will save money - £500 million a year eventually - but in the short term it will cost the Government more - an extra £100 million in 2001/02.
The main improvements are
- Men and women will be equally entitled to the new bereavement benefits (as they will be called). At the moment men only get some widow's benefits in exceptional circumstances.
- The widow's payment of £1000 on the death of a spouse will be doubled to £2000. It will be paid to a bereaved spouse whose partner died under pension age.
- Widowed mother's allowance will remain and will be paid at the same levels as it is now. But it will be extended to widowed fathers with a dependent child.
- Widowed parents will be given up to £10 a week more than under current rules if they claim means-tested benefits.
- The new rules will only apply to anyone who is bereaved after they come into force, probably in April 2001. Anyone bereaved before that date will be paid under the existing rules.
But the changes are not all good.
- Men and women bereaved when they are 45 or more who have no dependent children at that age will get a weekly benefit for six months only. Currently it lasts until the age of 60. The weekly benefit will also be less than is paid now as it will not include any extra payment based on the late spouse's earnings. When it runs out widows will have to support themselves by work or other means. If they want to claim means-tested benefits they will have to be actively seeking work. Cutting the benefits paid to this group will enable the Government to save £500m a year when the changes are fully in place.
- Although it is good to extend the benefits to men, they will qualify on the basis of their late wife's contribution record. Women are less likely to have a full contribution record than men are and so some men will be left without full benefits. The new benefits will still only apply to couples who have actually been married - unmarried couples will be excluded.
- The increase in widow's payment is not as generous as it seems. The amount has not been increased since it was first paid in 1988. By 2001 it would have to be around £1700 simply to restore its value to what it was worth in 1988.
DISABILITY BENEFITS
Major changes are also planned in the benefits paid to disabled people. In particular the Government hopes to reduce the number of people claiming incapacity benefit by 170,000 - about one in ten of the current number. It will do that by
- changing the contribution conditions for getting the benefit. Under the new rules, people who have been unemployed will not generally be entitled to incapacity benefit. Instead it will be confined to people who stop work because of their illness or disability.
- imposing a means test on it. Under the new rules anyone with a pension from their job (or a personal pension) of more than £50 a week will have their incapacity benefit reduced. It will be cut by 50p for each £1 over £50.
- making sure that people who claim incapacity benefit are helped to see if they can do any work. At the moment there are strict tests of a person's ability to do certain tasks. In future, they will be encouraged to do whatever work they can. And benefit will be reviewed periodically to make sure that they are still unable to work. There will also be assistance with training and re-training. In other words, anyone who can support themselves will be expected to do so.
However, it is not all bad news.
- Disabled people will be given higher rates of means-tested benefits - an extra £5.75 a week at current rates of benefit for a single person or £8.30 for a couple. About 175,000 people will benefit each year at a cost of £60 million.
- The severe disablement allowance which is paid to people who have been disabled most of their lives and had little or no opportunity to work will be increased, though people aged 20 or more will no longer be able to claim it.
- There will be extra money for some very disabled children aged three and four.
- Overall, though, the changes, which will be phased in from 1999, will save large amounts of money, around £800 million a year eventually. The Government says that money will be 'refocused' onto those with greater needs.
MINIMUM GUARANTEED INCOME
The Government has decided to make an big increase in the level of income support paid to pensioners from April 1999. The increase is three times what is needed to keep the benefit in line with inflation. It will set the minimum income for people aged 60 or more at £75 a week for a single person and £116.60 for a couple. Higher rates will apply at the age of 75 and 80.
But as we predicted in Saga Magazine in September, these plans fall far short of the guaranteed minimum income which the Government promised in July. Since we revealed that hundreds of thousands of pensioners would be excluded from the guarantee, the Government has come up with new figures which show the problem is even worse than we feared. Altogether more than a million people aged 60 or more will have an income BELOW the minimum level but will NOT get it increased to the 'guaranteed' amount.
Social security Minister John Denham has admitted that 600,000 pensioners will be excluded because of their savings. Anyone - or any couple - whose savings exceed £8000 cannot get income support. And in September Mr Denham told liberal democrat MP Steve Webb that 600,000 pensioners would be excluded from the guaranteed income by this rule. Age Concern has now called on the Government to review the savings limit which has not been increased since it was fixed at £8000 in 1990. To have kept up with inflation it should rise to more than £11,000 in April.
Another 300,000 older people will be excluded from the minimum guaranteed income because they live in a residential care or nursing home. After contributing to their fees they are allowed to keep just £14.45 a week. From April that will rise by a miserly 30p to £14.75 a week. That is their guarantee. And of course the 800,000 pensioners living abroad are excluded from any entitlement to a means-tested benefit. So they will not be able to claim any extra even if their income is below the minimum 'guaranteed' level.
WINTER FUEL PAYMENT
The Government is paying nearly all pensioner households either £20 or £50 to help with their fuel bills. This year the qualifying date for the payment is November 9 1998. The payment is at two levels
- Any individual or couple who gets income support and is aged 60 or more on November 9 1998 will get £50. The payment should have been sent by giro to your home address by the end of November.
- Anyone who does not get the £50 payment and who is aged 60 (woman) or 65 (man) who gets retirement pension, attendance allowance, widow's benefit, incapacity benefit, invalid care allowance, or a war pension should get a smaller amount. If you are the only pensioner in the household you should get £20. If you live in a household with another pensioner, such as your spouse, then each pensioners will get £10. These payments should be made by the end of January 1999. A giro will be sent to the post office where you collect your pension and you will be given it by the counter clerk. You can cash it straight away. If your pension is paid into a bank account then so will the Winter Fuel Payment and you will be sent a letter telling you that has been done.
Some people cannot get the payment. They include people who have been in hospital for a year, people in residential care or nursing homes who get income support to help with their fees, and those who live abroad. If you have not received your payment or have any questions about it ring the winter fuel help line on 0645 15 15 15. Calls are charged at local rates.
The Winter Fuel Payment is separate from the cold weather payment paid to pensioners and some others on income support if the average temperature in an area falls to zero Celsius or less for seven consecutive days. Those payments of £8.50 are sent out automatically.
January 1999
go back to Saga writing
go back to writing archive
go back to the deadline front page
e-mail Paul Lewis on paul@deadline.demon.co.uk
All material on these pages is © Paul Lewis 1999