The colder months are drawing in, but millions of pensioners may think twice before reaching for the thermostat this year after losing their Winter Fuel Payment. It comes at the same time as energy prices are rising, with the average household bill surging 10% from 1 October when the new Ofgem price cap kicked in.
Chancellor Rachel Reeves announced the change in her spending audit in July, revealing plans to means test the valuable pensioner perk going forward. This means the payment, worth up to £300 per year, will be axed for all but the poorest households. Age UK says 10.7 million pensioners will be impacted.
Pension Credit is the main measure being used to test eligibility – a benefit which essentially tops up your state pension if you are on a low income. As a result, checking whether you qualify is more important than ever. It could be the difference between receiving two cash benefits or none at all.
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The number of Pension Credit claims has more than doubled since the government announced its plans earlier this year, however many are still missing out. The latest government estimates suggest only seven in 10 people who are eligible for Pension Credit make a claim.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, says: “Pension Credit is a hugely valuable benefit that not only tops up income but also acts as a gateway to other support such as a free TV licence for the over 75s as well as help with council tax.
“The Winter Fuel Payment will also be a major help as we head into the winter months with energy bills on the rise. Anyone who thinks they or a loved one could be entitled should put in a claim.”
Against this backdrop, we answer some key questions on pensioners’ minds. Do you still qualify for the Winter Fuel Payment? How much are you entitled to receive? Plus, how do you claim Pension Credit?
What is the Winter Fuel Payment?
The Winter Fuel Payment is an annual tax-free allowance worth up to £300. It aims to help pensioners pay their energy bills during the coldest months of the year, when many fear the consequences of turning the thermostat up.
Pensioners have been eligible for some support on energy bills since 1997, but under Labour’s new rules, the support will be means tested. Households will be eligible for up to £200 if they receive Pension Credit, or £300 if they receive Pension Credit and have a household member aged 80 plus.
Who gets the Winter Fuel Payment?
To qualify for the Winter Fuel Payment, you need to have reached the official state pension age. For the 2024/25 allowance, this means being born before 23 September 1958.
Unlike previous years when all pensioners qualified, you will now need to meet the government’s means-testing requirements. You will qualify if you receive one of the following benefits:
- Pension Credit
- Universal Credit
- Income-related Employment and Support Allowance
- Income-based Jobseeker’s Allowance
- Income Support
- Child Tax Credit
- Working Tax Credit
You will need to have received this benefit during the qualifying week of 16-22 September 2024. If you were eligible for the benefit during this time but it went unclaimed, the Department for Work and Pensions (DWP) may be able to backdate your claim. We share further details on how this works with Pension Credit below.
How much is the Winter Fuel Payment and when will you receive it?
If you live alone and qualify for the Winter Fuel Payment but are under 80 years old, you will receive £200. Once you are 80+, you will receive £300. The payment is per household, so if you live with someone else and you both qualify, you will only receive one payment. The same age thresholds apply.
If you are eligible for the Winter Fuel Payment, you will receive a letter in October or November telling you how much money you can expect to receive. If you do not receive a letter but think you are eligible for the benefit, you can check whether you need to make a claim using the government website.
Most payments are then made in November or December.
How to claim the Winter Fuel Payment
You should receive the Winter Fuel Payment automatically, if you are the correct age and already receive one of the benefits outlined above (such as Pension Credit). You do not need to claim it separately.
One exception is if you live abroad. In this instance, you will need to claim the payment by post or by phone. Further information including contact details and cut-off dates can be found on the government website.
Keep an eye on your post in October and November to ensure you receive a letter telling you how much Winter Fuel Allowance you will be paid. If you do not receive this, it is possible that something has gone wrong. You can contact the Winter Fuel Payment Centre if you have any concerns. Contact details can be found on the government website.
How to claim Pension Credit
Pension Credit is one of the most underclaimed benefits, worth over £3,900 a year on average. It essentially tops up your state pension if you are on a low income. As introduced previously, it is now being used to means test the Winter Fuel Payment too.
Pension Credit will top you up to £218.15 per week if you are single, or £332.95 if you are a couple. If your income is higher than this, the government says you might still be eligible depending on your circumstances, for example if you have a disability or care for someone.
You can apply for Pension Credit online using the government website, by phone or by post. You can start your application up to four months before you reach state pension age. You will need your National Insurance number when you apply, plus information about your income, savings and investments. If you have a partner, you will need the same details for them too.
If you missed out on Pension Credit payments for a period of time (perhaps because you didn’t realise you were eligible or forgot to apply), the DWP can backdate your application by up to three months.
If you think you are eligible for Pension Credit but your application is turned down, you can challenge the decision by asking for a mandatory reconsideration. This is free to do. You usually need to ask for a mandatory reconsideration within one month of the date of the decision.
Why has Labour scrapped the Winter Fuel Payment for the majority of pensioners?
Reeves announced she had taken the “difficult decision” to cut the Winter Fuel Payment earlier this year, after accusing the previous Conservative government of leaving a £22bn black hole in the public finances.
Labour has faced significant backlash for the decision, not only from the public and opposition MPs but also from within its own party.
Back in September, opposition MPs staged an attempt to block the government’s plans through a Commons vote. This was ultimately unsuccessful, but a large number of Labour MPs abstained from the vote rather than voting in favour of their party’s policy.
Speaking at the Labour party conference on 23 September, Reeves defended her decision to means test the benefit. “Faced with that £22bn black hole that the Conservatives left this year, and with the triple lock ensuring that the state pension will rise by an estimated £1,700 over the course of this parliament, I judged it the right decision in the circumstances we inherited,” she said.
The state pension triple lock, which Reeves referred to in her speech, is expected to increase state pension payments by around 4% next April. This is equivalent to around £460 more over the course of the year, if you receive the full new state pension. Labour has said this will offset any losses for those who no longer qualify for the Winter Fuel Payment. However, it is unlikely to bring much consolation to pensioners given how much retirement costs have risen in recent years.
Why is the decision to scrap the Winter Fuel Payment so controversial?
Critics of Labour’s decision say using Pension Credit to means test the payment will create a flawed system. This is because thousands of pensioners who just miss out on Pension Credit could fall off a financial cliff-edge when the Winter Fuel Payment is removed.
Research from data and analytics company Policy in Practice suggests an estimated 130,000 pensioners miss out on Pension Credit because they are just £500 over the annual income threshold, or £9.62 per week. This means they would potentially be better off if they had a lower income but qualified for Pension Credit and the Winter Fuel Payment.
“Those just skimming above the eligibility criteria for Pension Credit are likely to suffer the most this winter, particularly as the payment is being stopped with immediate effect,” says Alice Haine, personal finance analyst at Bestinvest.
“Naturally, it makes sense for the wealthiest members of society to no longer receive an extra sum to cover their fuel bills but limiting this payment to only the very poorest pensioners risks stretching the budgets of those just managing to make ends meet,” she adds.
On top of this, Pension Credit is famously one of the most misunderstood benefits. “The government has attempted to deal with this through a Pension Credit awareness drive, but turning the tide in the space of a few months on what has historically been a chronically underclaimed benefit is a massive, possibly insurmountable, challenge,” says Tom Selby, director of public policy at AJ Bell.
Age UK says that 82% of pensioners living below or just above the poverty line will lose their Winter Fuel Payment this year as a result of the change in policy.
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