Most pensioners will lose their Winter Fuel Payments – worth up to £300 a year – just as shock new data reveals more retirees have been dragged into poverty.
The Government is set to scrap a vital winter benefit worth up to £300 for the vast majority of older Brits.
The decision comes just as shock new data has highlighted how more and more pensioners have fallen into poverty over the last decade.
The latest decision by the Government risks dragging even more people into financial hardship, and makes it more vital than ever that retired households claim all the help they're eligible for.
Winter Fuel Payments scrapped for millions
Chancellor Rachel Reeves announced yesterday that the vast majority of pensioners will no longer receive the Winter Fuel Payment.
The payment is worth up to £300 a year, depending on your age and whether anyone you live with also qualifies.
From now on, only those who are in receipt of Pension Credit (more on that later) will receive the payments, meaning around nine out of 10 pensioners will no longer get it.
How more pensioners have fallen into poverty
It comes as new research highlights how more pensioners have been falling into poverty as the equality gap has widened.
Higher State and private pensions meant average incomes for those aged 66 and over rose by 12% between 2011/12 and 2022/23, the research found.
But the poorest pensioners only enjoyed 5% increases during the same period – and this was enough to plunge thousands of them into poverty.
The huge wealth disparity between the richest and poorest pensioners was a key finding of the report by the Institute for Fiscal Studies, which was funded by the Joseph Rowntree Foundation.
The study found that average pensioner incomes have been growing at a similar rate to working-age incomes since 2011. This has been driven by higher State and private pension incomes.
But the poorest pensioners have enjoyed a far lower growth rate as they’ve not benefitted from rises in either employment or private pension income.
Growth in State Pension incomes has been offset by falling levels of other benefits, meaning total benefit incomes – including the State Pension – rose just 1% between 2011-12 and 2022-23.
The report concluded: “In other words, the support that poor pensioners get from the state increasingly comes from the State Pension, rather than the means-tested benefit system.”
Poverty for pensioners
The study also highlighted the practical financial difficulties that are faced by poorer pensioners who are more exposed to sharp rises in gas, electricity and food prices.
It pointed out that pensioner material deprivation, which is a measure of the household’s inability to afford key essentials – rose from 6% in 2019-20 to 8% in 2022-23.
While this might not sound like a huge percentage, it equates to a jump from 700,000 pensioners to a million.
“The fraction of pensioners who could not afford to keep their home warm rose from 2% to 5% (230,000 to 570,000 pensioners),” it added.
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How Pension Credit can help
Pension Credit can provide a huge boost to low-income households.
And, with Winter Fuel Payments worth up to £300 being pulled for anyone who isn't in receipt of the Credit, its value will only increase this winter.
The worrying news is that many eligible households simply aren't claiming it, either through lack of awareness or wrongly assuming they wouldn't be eligible.
Analysis by the Department for Work and Pensions found that around 880,000 eligible pensioners are missing out on this vital help.
Jon Greer, head of retirement policy at financial firm Quilter, said it's "never been more important" for pensioners on low incomes to check their eligibility.
"The importance of claiming this credit if eligible cannot be overstated," he added.
"Pension Credit not only guarantees a weekly income to £218.15 if you’re single or £332.95 if you have a partner, but also opens the door to a variety of other benefits. These include help with housing costs, council tax, and heating bills.
"For those unsure about their eligibility, an online pension credit calculator is available to provide an estimate of potential benefits.
"Applying is simple and can be done through various methods, including filling out a form online, printing and completing a paper form, or calling 0800 99 1234."
You can find out more by reading our guide to Pension Credit.
Boost for private pensions
The IFS study also revealed how rising incomes from private pensions were the largest single contributor to growth in average pensioner incomes over the past two decades.
This is down to two reasons. First is the gradually increasing coverage, with 54% of pensioners having received income from private pensions in 2019–20 compared with 50% in 2002–03.
There has also been an increase in the amounts received. The average private pension income among those with positive incomes rose from £4,700 to £7,600 a year over this period.
Meanwhile, average income from employment – including self-employment – among those aged 66 to 74 has also been rising gradually over time.
“This is mainly due to rising employment rates but is also due to rising average earnings among those in paid work,” it stated.