To be eligible for this year’s £200 Winter Fuel Payment, you’ll need to receive certain benefits.
The relevant benefits are Pension Credit, Universal Credit, Income Support, income-related Employment or Support Allowance or Jobseeker’s Allowance.
Since 1997, the Winter Fuel Payment has been available universally to pensioners if they were born on or after qualifying date for the state pension age, which is currently 25 September 1957.
An estimated two million who are financially struggling will miss out, according to Age UK’s estimates.
Eligible pensioners over 80 years old, who meet the new eligibility requirements, will receive a higher tax-free annual payment of £300.
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Labour’s public spending audit Fixing The Foundations notes the changes “will better target support for heating costs for those who need it”.
It continued: “All pensioners will benefit from the Government’s commitment to maintain the triple lock for the basic and new state pension in this Parliament. Winter Fuel Payments are devolved in Scotland and Northern Ireland.”
The move is to address what Reeves called a “black hole” in the UK’s public finances worth £22bn, which she says is down to the economic decisions of previous Conservative Governments.
“This is not the statement I wanted to give today, and these are not the decisions I wanted to make. But they are the right decisions in difficult circumstances”, the Chancellor told Parliament.
‘Vulnerable people at risk of going without heating’
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said the “shock decision” could leave many vulnerable people without heating during the colder winter months.
Haine said: “The withdrawal of this vital support will apply from this winter, meaning many who may have budgeted their finances carefully, expecting to receive the payment this year, will now miss out.
“When you consider pensioners were already in line to receive less, as this winter is the first without the £300 cost-of-living winter fuel top-up, the latest news will come as a blow at a time when many people’s finances are only just beginning to recover from the days of sky-high inflation.”
Haine added: “Unlike workers who can take on extra work to cover a shortfall, pensioners are typically on fixed incomes so have to budget with the set amount they receive from their state pension and private pension.
“Only giving the payment to those on benefits could put many whose income sits just above that level at risk during the colder months because they cannot afford to put the heating on.”
Winter Fuel Payment change could lead to more credit claims
After the changes to pensioners’ Winter Fuel Payment, the Chancellor said £1.4bn will be raised to go back into the public spending purse.
However, Steve Webb, partner at LCP, believes this saving might not be the case as it will encourage more people to claim Pension Credit, and the Government has asked people entitled to it to do so.
Webb said: “When the free BBC TV licence for all over-75s was limited to those on Pension Credit, this led to a surge in applications for Pension Credit, and a similar effect is likely in this case.”
It comes at a time when one in five pensioners are set to pay tax on their state pension despite the triple lock mechanism that’s in place.
This is due to the Conservatives freezing tax thresholds in the last Budget in March this year. As the triple lock guarantees the state pension will rise in line with inflation, average earnings growth or 2.5%, around two-and-a-half million pensioners are set to move into a higher rate and pay more income tax.
But, since the triple lock was introduced by the Conservative and Liberal Democrat coalition in 2010, it has proved a rewarding scheme for those after their working life.
However, since the rise in energy bills following the Russian invasion of Ukraine on top of a cost-of-living crisis, the payments have been invaluable to pensioners struggling financially.
Indeed, there are over two million pensioners considered to be living in relative poverty, which could almost double by 2040, according to an Independent Age report.
But, at the other end of the scale, the move will see those who need the support most get it. While the scheme helped 11 million pensioners with their winter bills, more well-off retirees who did not need the cash found it difficult to opt out due to a complicated process.
Just 186 pensioners in the 2021/22 tax year opted out of the scheme, while one in five over-65s are considered a millionaire, according to the Office for National Statistics (ONS). Therefore, over the years, there were potentially millions of pounds that could have been redistributed to those who need it more.
Also, as pensioners would receive the payment automatically, those who had moved abroad still received the payment.
