Paying expats Winter Fuel Payment seems a little odd for a government that blows hot and cold over paying state pension cost of living increases to thousands of pensioners.
Winter fuel allowance is a payment of £100 to £300 a year to expats receiving the British state pension.
The allowance was aimed at helping pensioners on low incomes keep their homes warm in the winter, but the many are questioning whether pensioners living in warmer countries really need the payment.
Tampering with the payment in Britain would cause a stir as fuel and energy prices are continuing to rise – most major energy firms have announced price increase of up to 6% on gas and electricity in recent weeks.
Prime Minister David Cameron has also promised new laws to make sourcing cheap energy tariffs easier for households.
Expats and winter fuel allowance
A recent poll asked expats whether they felt they needed the winter fuel allowance.
Just over half (52%) agreed that they could do without the benefit.
The consensus would seem that expats would forego other benefits, like the winter fuel allowance, if they were all granted index-linked state pensions.
The payment was only protected by a European Court of Justice ruling in June 2012, after a retired expat in Switzerland claimed the British government discriminated by failing to pay the allowance to all pensioners – even if they left the UK decades ago.
Around 73,000 expats qualify for winter fuel payments at a cost of £15 million a year, because the Department of Work and Pensions would only pay the allowance to pensioners who lived in the UK until they retired.
Temperature test
Now, the government must pay everyone living in the European Union and a handful of other countries who receive state pension regardless of when they left the UK, which could make the bill soar to £90 million.
Work and Pensions Secretary Iain Duncan Smith is planning to get round the ruling with new laws that include a temperature test – which basically means if expats live in a country where the country does not fall below a pre-set level, they cannot claim the allowance.
“We will fight these ridiculous EU rules. It is ludicrous we could have to pay more pensioners living in hot countries,” he said.
Households with someone on a state pension qualify for the £200, while those with someone over 80 get £300.
Of course any temperature test would be ludicrous as people living in places like Dorset would be denied WFA whilst those who living in Finland, Norway or Sweden would get WFA as the winter is significantly colder than the North of Scotland. That would go down like a lead balloon to the Tory heartlands in the south and I don’t believe IDS is that stupid to go down that route. The other point is that any cost savings from denying some UK ex-pats would be outweighed by the costs of implementing a temperature test scheme for WFA.
I’ve blogged the following point so many times but the mindset of Ministers has their eyes wide shut, but the simplest way of making the ‘system’ fair, is to remove WFA entirely, raise state pension amounts and then you can claw back most of that cost by taxation and cost savings. Quite why WFA was ever paid out to people before retirement age is beyond me, but most things Brown did were beyond belief.
One last point is the retrospective aspects of the ECJ ruling on WFA changes. Theoretically those of us who have have been denied the WFA under previous rules should be able to claim back payments. The DWP stance on this was “they don’t do retrospective compensation” even though the ruling was retrospective. However they also said they have created back payment claim forms as a result of this ruling. That said, they also stated to me that even if I fill in and return this new claim form, they still wont pay up.
Go figure this perverse contradiction in their statement as I can’t !
I guess the fat lady hasn’t sung yet on this ruling and there’s more to come.