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In a time of austerity pensioner benefits are under consideration to be cut. Questions are being asked as to why these benefits are being paid to wealthier older households. Despite such criticisms there is an argument that pensioner benefits positively influence behaviour and improve wellbeing in the older population.

This report seeks to cut through recent debate by looking at evidence on the impact of pensioner benefits. It examines options for reform, public spending on pensioner benefits, their scope and take-up, and impact on behaviour and wellbeing, concluding by discussing key choices for policymakers.

Findings

Free prescription charges

  • Department of Health cost = £4 billion in England
  • Prevent ‘under-consumption’ which might result if prescriptions were charged for, potentially avoiding harmful health consequences for older people – and additional NHS treatment costs.

Winter fuel payments

  • Department for Work & Pensions cost = £2.2 billion
  • Average of 41% of the value of Winter Fuel Payments is spent on household fuel - evidence suggests these payments have been successful in reducing preventable, excess winter deaths.

Free bus passes

  • Department for Transport = £1.2 billion in England
  • Every £1 spent on concessionary bus schemes for older and disabled people generates at least £2.87 in benefits to individuals and the state.

Free T.V. licenses for over 75s

  • Department for Culture, Media & Sport cost = £0.62 billion
  • For the poorest pensioners receiving Pension Credit (guaranteeing them £151.20 per week), a £145.50 TV licence represents 1.9% of their annual income.

Conclusion

Policy makers have two options, they can preserve pensioner benefits in their current form and do nothing. Or increase targeting of pensioner benefits by focusing expenditure on particular groups such as the ‘oldest-old’, or means-testing to target low-income households. We hope findings in this review will be situated in a wider debate about how we pay for, and seize the opportunities presented by, an ageing population well into the future.