More than 100,000 pensioners will lose their Winter Fuel Payments next year due to the increase in the state pension, analysis reveals.
Increases to state and other pensions next April will push these pensioners over the £35,000 cut off point that makes them eligible for Winter Fuel Payments, according to figures from LCP.
With the £35,000 cut-off, which was brought in earlier this year, set to be frozen for the foreseeable future, more people will fall victim to this in coming years.
LCP says over the next four years as many as 500,000 pensioners could lose their Winter Fuel Payments as a result of the threshold remaining fixed, depending on the rate of inflation.
Steve Webb, This is Money’s pensions columnist and partner at LCP, said: ‘The new £35,000 cut-off for Winter Fuel Payments is set to be frozen for years to come, meaning that the policy will bite progressively harder as inflation-linked increases in other pensions cause people to cross the £35,000 line.
‘Given that inflation-linked increases are simply designed to maintain people’s standard of living, it is hard to see why they should be treated as making people “better off” and hence less deserving of a Winter Fuel Payment.’
Winter Fuel Payments of £300 are made automatically to pensioners who haven’t opted out, with the money later ‘recovered’ from those who aren’t eligible
People who received WFP in 2023, lost it in 2024 when it became means-tested and then got it again in 2025 when it was restored to those receiving less than £35,000, will now lose the payments again in 2026.
Webb said: ‘People who cross the line in the coming years will have experienced a Winter Fuel Payment ‘rollercoaster’, first having it taken away, then given back and now lost again.
‘Such constant changes do little to help people manage their finances in retirement.’
Winter Fuel Payments of £300 are made automatically to pensioners who haven’t opted out, with the money later ‘recovered’ from those who aren’t eligible.
This year, some nine million are expected to receive Winter Fuel Payments, but an estimated two million in England and Wales, who are over state pension age and have a taxable income above £35,000, will not be able to keep it if they didn’t already opt out.
Someone with an income of £33,600 and currently entitled to WFP could lose this payment in 2026/2027 due to inflation-linked increased in the value of their pension income, based on a 4.7 per cent rise in their state pension and a four per cent increase in their company pension.
This would push their total pension income to £35,027, meaning they lose their entitlement to the £300 Winter Fuel Payment.
The state pension is set to increase by 4.7 per cent in April next year as part of routine changes so that pension payments keep pace with inflation.
Announcing the £35,000 policy earlier this year, Pensions Minister Torsten Bell said: ‘It is a round number, and we do not intend to change it in the years ahead.
‘We will leave the £35,000 at the current level, as all thresholds in the income tax system are frozen for the coming year, so that pensioners know that that is the threshold and there are no surprises.’
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