Winter fuel payment update as 500,000 pensioners set to miss out | Personal Finance | Finance

Half a million more  pensioners will be denied winter fuel payments by the end of the parliament, an analysis has predicted.

Former pensions minister Sir Steve Webb suggested every year on average about 100,000 additional older people will lose their winter fuel payments by 2030 because the new means test is frozen.

Ministers have confirmed that the threshold will be frozen for the coming years, dragging in more pensioners with inflation and rising state pensions through the triple lock.

Sir Steve, partner at pension consultants LCP said: “The Government’s own figures clearly suggest that they expect the number of losers from the new policy to rise each year.

“If the £35,000 threshold is frozen, then annual increases in state and private pensions will drag more and more pensioners over the limit each year, losing their winter fuel payment in the process. With around 2 million pensioners currently over the £35,000 threshold, this number could easily rise by another half a million by 2030.

“This could end up being another way in which governments use inflation to quietly raise additional revenue year-by-year.”

Under the new system, all pensioners will automatically receive a payment of £200, or £300 for over-eighties. Couples who are both pensioners will get half the payment each, which will be clawed back through the tax system.

Officials say that about two million pensioners who have incomes of more than £35,000 will not get payments this year.

However, they estimate that the policy will ultimately save £450 million a year compared with the universal system that was in place until last year, a figure Miliband said was “not to be sneezed at”.

Sir Steve said: “Our analysis also suggests that the new policy will raise less money next year than the headline figure quoted of £450m. Assuming an initial yield of around £350million, roughly two thirds of this will be wiped out by higher pension credit costs. The net revenue from the policy is likely to end up barely a tenth of the amount banked by the Chancellor when she presented her last Budget”.

Announcing the U-turn, following a Daily Express campaign on the issue, Chancellor Rachel Reeves said: “It will be still means-tested, but at a higher level, we’ve listened to people’s concerns around the level of the means test.

“Because of changes we’ve made and the stability we’ve brought back to the economy, we are able to increase that amount.”