Nine million pensioners to get Winter Fuel Payment this winter
More than three-quarters of pensioners will receive either £200 or £300 from the Winter Fuel Payment this winter, after the government back-tracked on its decision to only offer the payment to those claiming certain benefits.
The Chancellor Rachel Reeves last summer announced that the Winter Fuel Payment, previously paid to all pensioners to help them cover energy costs, would be targeted at recipients of Pension Credit and certain other means-tested benefits. However, the government has now announced that all pensioners with an income of £35,000 or less will receive the payment automatically this winter, regardless of whether they are claiming benefits. This means that nine million pensioners this year will get the payment.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The partial U-turn on the Winter Fuel Payment will make a huge difference to the finances of some of the lowest earning pensioners, who had missed out by a hair’s breadth by earning fractionally too much to qualify for Pension Credit. They will now be able to budget for a warmer winter and a less painful squeeze on their finances as the cold nights draw in.
“They’ll also be getting a warm glow from the fact they may have a couple of small cuts in the energy price cap to look forward to between now and then, which should make for a more comfortable winter all round.”
Everyone in England and Wales born before 22 September 1959 will qualify for the Payment this year, which will be paid directly into their bank accounts. The payment is £200 per household, or £300 if someone in the household is aged 80 or above.
Pensioners earning above £35,000 will still receive the Winter Fuel Payment automatically, but will then have it re-collected via the Pay As You Earn (PAYE) system, or through their Self-Assessment tax return.
Calculate how much equity you could release
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the DIY investment platform, said: “There will be the option to opt out of receiving the payment, in a similar fashion to parents who opt out of receiving Child Benefit if they earn too much. This might be more straightforward for those that find the new system confusing and don’t want the hassle of the payment being recovered, though pensioners will have to wait for the details of that option to be confirmed.
“Ultimately, for pensioners earning just above the £35,000 threshold, the latest news will be disappointing. Some may even choose to reduce their income from private pensions if it means they can just skim under the threshold to receive the payment. Others may have to take it on the chin that they aren’t eligible for the payment.”