With the winter fuel payment at risk of being axed for most pensioners, our Summary guide to this policy shift explains exactly who and what will be impacted by the changes announced so far.
Less than a month after Labour swept to victory in the General Election and entered government, Chancellor Rachel Reeves announced one of her most controversial policies to date. Hoping to save £1.4 billion a year, she proposed scraping the universal winter fuel payment and replacing it with a means-tested system that will mean only the poorest pensioners will be eligible to claim.
Perhaps unsurprisingly, there has been backlash based on the policy itself and its announcement, which has been described as too sudden and without proper consultation. There are also concerns that winter will hit even harder with the energy price cap expected to rise by 10% in October and prices likely to stay high throughout the season.
But could these changes impact you or your family’s finances? Let’s dive into the details:
What are winter fuel payments?
Introduced by then Chancellor Gordon Brown in 1997, the winter fuel payment was designed to help older people cover the cost of heating in the colder months. With many elderly people risking ill health or worse by avoiding using the heating, this buffer meant they could afford to turn up the thermostat as soon as the temperature dropped.
All pensioners over the age of 66 were eligible to claim the tax-free winter fuel payment, no matter their income. It was paid in one lump sum each autumn and was worth between £100 and £300 depending on the age of the receiver.
Who will now be eligible to claim?
If the proposed changes go ahead, it’s predicted that around 10 million people will no longer be eligible for the winter fuel payment, reducing the overall number of claimants from 11.4 million to just 1.5 million.
That’s because fuel payments will only be offered to people who receive Pension Credit or another means-tested benefit. And that’s not all; pensioners will also have to complete 243 questions (set across a 22-page document) to make a claim.
If eligible, those receiving Pension Credit could qualify for a payment of up to £200 while those who also have a household member aged over 80 could be eligible to receive up to £300.
However, it’s worth keeping mind that people can be struggling with their finances yet still don’t qualify for Pension Credit. The charity Age UK has said that scraping the fuel payment for low-income pensioners who don’t claim Pension Credit could mean as many as two million people who badly need the money to stay warm this winter will now miss out.
How does Pension Credit work?
Those who have spoken out against the new policy have also pointed out that Pension Credit often goes unclaimed as many pensioners don’t know that they’re eligible. The good news is that the number of Pension Credit claims has doubled since the government made its announcement, increasing from 17,900 in the five weeks before the plans were unveiled to 38,500 in the five weeks after.
Pension Credit is worth around £3900 on average and can top up your state pension if you have a low income. A single person could receive up to £218.15 per week and a couple could get a £332.95 weekly top up. You might also be eligible if you have a disability or are a full-time carer.
Unfortunately, Policy in Practice predicts that 130,000 pensioners could be missing out on Pension Credit because they are just £500 over the annual income threshold.
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