Despite the increase in Pension Credit take-up, an expert has warned it could still take four years for all pensioners eligible for the payment to get it.
There has been an increase in Pension Credit applicants after Chancellor Reeves announced plans to change the universal eligibility criteria for Winter Fuel Payments.
Previously, Winter Fuel Payments were paid to all who had reached state pension age on or before the end of the qualifying week and met certain other entitlement conditions, such as not being in receipt of free treatment in hospital for more than a year. But now, the payment will be means-tested, mainly benefitting those who receive Pension Credit.
In most years the amount has been £200 for households where the oldest person is under 80, and £300 for households with someone aged 80 or over.
As many as 880,000 pensioners who could be claiming Pension Credit are not, Department of Work and Pensions (DWP) figures suggest. And now, as many as 10 million pensioners will now be without this £300 Winter Fuel Payment support due to the criteria change.
Since the plans were announced, take up for Pension Credit has doubled in these past five weeks, but new freedom of information data from the DWP shows that a third of applicants have been denied.
The Winter Fuel Payment can help towards energy bills in the winter PAReeves announced the rule change on July 29, in hopes of raising £1.4billion for the Treasury to try and put a dent in the £22billion black hole in the public finances.
However if all of the 880,000 pensioners who are eligible apply, the Treasury would face a tax bill of £3.8billion, a report by Policy in Practice found.
Before the announcement, around 4,000 taxpayers on average were applying for Pension Credit each week, mainly new retirees or those whose circumstances have changed.
Assuming that the higher level of applications continues – an extra 3,700 claims a week – this would represent an extra 200,000 pensioners applying each year.
Sir Steve Webb, former pensions minister and partner at LCP said: "If we have 880,000 entitled people not claiming, then you’d need to keep going for (more than) four years to clear all the non-take-up problem."
He added: "In reality, once the ‘caravan moves on’, and Pension Credit drops out of the news, this surge in claims will fall back – just as it did when the BBC restricted free TV licences to the over-75s only on pension credit."
There is now a real worry that those who apply may not even be eligible and even if they are eligible, they will not get the benefit for around four years.
The data showed that since the 2019/20 tax year up to July 31, 2024, the DWP received a total of 848,973 Pension Credit claims of which 271,761 were denied.
Jon Greer, head of retirement policy at Quilter said: "There is a real concern that the 'difficult decisions' made by the new Labour Government could significantly impact Britain’s poorest. Low-income pensioners, who might just miss out on qualifying for pension credit and, consequently now, the Winter Fuel Payment, are particularly at risk despite not being wealthy.
"Another worry about the new policy is that many pensioners may still be unaware of their eligibility for Pension Credit. It is evident that when the government actively promotes Pension Credit, there is a noticeable increase in the number of applicants, which is positive.
"However, with a third of pensioners who apply for Pension Credit being refused, there is considerable confusion over who is eligible.
"Following the announcement regarding the Winter Fuel Payment, we know that the number of claims has risen due to the negative headlines, but the Government to continue with this policy effectively must invest considerable effort into further promoting the application process and its benefits or risk literally living pensioners out in the cold this winter."
LATEST DEVELOPMENTS:
To successfully get Pension Credit in the UK, and consequently get Winter Fuel Payments, applicants need to meet the following criteria:
- They must have reached state pension age, which is currently 66 or older.
- They must live in the UK.
- Their weekly income should be below £218.15 if they’re single, or £332.95 if they’re in a couple. If they have a disability or caring responsibilities, they might still qualify with a slightly higher income.
- If they have savings and investments over £10,000, each £500 above this amount counts as £1 in additional income per week when calculating eligibility. For example, if they have £11,000 in savings, this counts as £2 income a week.
A DWP spokesman said: "The number of applications for Pension Credit has more than doubled since the announcement in July but we know there is more to do which is why we have launched a campaign to boost uptake and awareness.
"We have surged additional staff to cover increasing Pension Credit calls and urge anyone who thinks they may be entitled to pension credit to check now."