Skip to main content

Pensioners: Poverty

Volume 506: debated on Thursday 4 March 2010

To ask the Secretary of State for Work and Pensions what additional assistance her Department provided to pensioners during the recent recession. (319026)

The Government provided a range of additional support to pensioners through the recent economic downturn and continues to provide support during the early stages of economic recovery.

In his pre-Budget report statement on 24 November 2008 the Chancellor announced the intention to give every pensioner a one-off payment of £60 on top of the regular £10 Christmas bonus received in December 2008. This was paid as a one-off increase to the Christmas bonus for 2008 only and was paid to all qualifying recipients of the Christmas bonus.

The payment provided additional direct financial support to help vulnerable groups through the economic downturn. In total the additional £60 payments cost around £900 million.

The Government made an additional payment alongside the winter fuel payment for winters 2008-09 and 2009-10 of £50 for households with someone aged 60-79 and £100 for those with someone aged 80 or over. This means the winter fuel payments have been £250 and £400 respectively which provides a significant contribution towards an older person’s winter fuel bill. Cold weather payments for the winter of 2008-09 and 2009-10 have also been increased from £8.50 to £25.00 providing additional support to the most vulnerable. With the exception of those living in certain accommodation such as care homes, all pensioners on pension credit will qualify for a cold weather payment when the average temperature has been recorded as, or is forecast to be 0° C or below over seven consecutive days at the weather station linked to the eligible customer’s postcode.

In April 2010, the Government have committed to increase the basic state pension by 2.5 per cent. This commitment, first given in 2001, was confirmed in the Chancellor’s 2009 pre-Budget report, despite the negative growth for the September 2009 retail prices index, providing a real-terms boost to basic state pension. This means that in 2010-11, pensioners will have seen a long-term real increase of 12 per cent. in their basic state pension, which is over £10 per week, since 1997.

The Chancellor has also confirmed that from April 2010 the poorest pensioners will also benefit from an above indexation increase in the standard minimum guarantee in pension credit, an increase of £2.60 a week for single people and £3.95 for couples. This means that, from April 2010, no single pensioner need live on less than £132.60 a week and no couple on less than £202.40. That is a real terms increase of more than a third for the poorest pensioners since 1997. The 2 per cent. increase ensures that the vast majority of the poorest pensioners will be able to see the full benefit of the 2.5 per cent. increase in the basic state pension.

In order to help those pensioners who receive income from savings and who may have been affected by lower interest rates, the Government have increased the threshold in pension credit (and housing and council tax benefit for those who have attained the qualifying age for pension credit) from £6,000 to £10,000 from November 2009, so that pensioners can have up to £10,000 without it affecting their benefits.

This change will benefit around 500,000 pensioners and will mean around 88 per cent. of pension credit recipients will have all of their capital ignored in their pension credit assessment.

The Government also increased ISA limits up to £10,200 for people aged 50 and over from 6 October 2009.

Since November 2008, the Government have maintained the standard interest rate used to calculate support for mortgage interest at 6.08 per cent. to provide support for homeowners on pension credit who receive help with their mortgage. In his pre-Budget report on 9 December 2009, the Chancellor announced that the rate of 6.08 per cent. would be maintained for a further six months, to provide continued support to these customers.

The Government also launched a tax-back awareness campaign in autumn 2009 contacting all those in receipt of pension credit to encourage them to claim back tax they may have overpaid on their savings income and, where possible, register to receive interest on their savings tax-free in future.