Should you give a £300 cost of living payment to someone who needs it?

The cost of living crisis is eating into all our incomes but has a particular impact on pensioners and that’s going to get worse as the weather turns colder.

Pensioners are hit harder as most have a fixed income and spend a greater proportion on life’s essentials, such as energy, that have risen in price substantially over the past 18 months.

This is the big picture that lay behind the Government’s decision to give all pensioner households an extra £300 cost of living payment to help them through the winter.

It is £300 per household not per person, was announced in Jeremy’s Hunt’s Autumn Statement, will not be means-tested and all pensioner households will get it on top of their Winter Fuel Payment.

Cost of living payments come as many pensioners will struggle with their energy bills this winter, but should those who don’t need the money give it away?

The extra money will provide real help to those who are struggling with their heating bills. However, there are also lots of pensioner households out there who don’t really need it.

Is it right to give them an extra tax-free £300 when people of working age struggling with bills are getting no similar additional help?

That’s a thorny question and debating the rights or wrongs of the payments isn’t the point of this column, so I will leave you to decide.

But it’s certainly the case that among Britain’s pensioner households there are some on comfortable final salary or other pension incomes, with lots of savings and investments built up, who are in a much better financial position than most.

I know that quite a few of them are This is Money readers and may be reading this column.

So, here’s my suggestion: if you know that this extra £300 cost of living payment is not something that you need, why not consider giving it to someone else who it would make a real difference to?

Our wealthier pensioner readers have worked hard, paid their taxes, lived frugally, borrowed carefully, and diligently built up their wealth over the years, so it is right that they feel they should get something back.

However, for some the extra £300 payment will end up boosting their savings or getting spent on non-essentials.

If that applies to you, maybe give your £300 to someone who needs it more. 

You might know someone who it could help – and while they may be reluctant to accept your charity, you can explain that as it’s extra money from the government you are happy to give it to them.

Alternatively, local charities and community organisations may be able to help you make direct use of the payment by giving it to someone in need.

If you do want to give the money away, this type of direct-as-possible giving seems a better method than handing it over to a large charity, which is what I know some do with their winter fuel payments.

There’s nothing wrong with that – and the cash will go to help a good cause – but getting these payments to someone who can directly use it via the shortest possible route is a way to make a swift difference.

Pension credits – another way to help someone out

The weather has turned colder and that combined with shorter, gloomier days means the situation for struggling pensioners is likely to become more acute as heating and electricity bills rise.

On a daily basis, I am hearing conversations among working age people who are worried about turning the heating on – so I can only imagine how bad things are for poorer pensioners who spend much of their day at home.

This makes it essential that pensioners on low incomes claim all the help they are entitled to – and pension credit is vital in this.

Pension credit is designed to help those who retire on low incomes, but about 850,000 of those who are entitled to it don’t claim something that could be worth £3,000 on average per year to them.

A push to get people to claim pension credit was made by the Government earlier this year and Steve Webb, our pensions columnist, tells me that it looks like it worked, as the system has been somewhat overwhelmed.

But if you may be entitled to it and haven’t claimed, or know a friend or relative in that position, don’t be put off by reports of admin blunders, make the claim.

It is vital for getting other help too. Pensioners are being urged to act now, as it means they can get the next £324 cost-of-living payment for those on lower incomes. Age UK says people need to get an application in by 18 December at the latest, read our guide on what to do to claim pension credit and extra winter help.