How to cease Rachel Reeves nabbing your £300 winter gasoline cost

The timing could barely have been much worse. Around ten million pensioners have been told they will lose out on vital winter fuel payments — just as letters from energy suppliers warning of near double-digit energy bill hikes pour through doors across the country.

Chancellor Rachel Reeves announced on Monday that she would strip winter fuel payments worth £300 from all pensioners who do not receive pension credit. 

The cuts will affect 10 million people aged over 66, and will raise an estimated £1.5 billion for her spending plans.

During the crucial Commons statement, Ms Reeves unveiled a fresh raid on pensioners and signalled more pain is to come — most likely in the form of tax hikes — to help fill a £22 billion hole in public finances.

But a former pensions minister and charities have blasted the decision, warning the cut will inadvertently leave poorer pensioners without the crucial help they need to keep warm this winter.

In the worst cases, the cuts could mean some elderly people will not turn the heating on — putting their lives at risk if the weather turns very cold.

So who will continue to receive winter fuel payments in future and how will it work? How can you make sure you don’t lose out if you’re entitled to the payments — and are there any ways around the Chancellor’s raid on pensioners?

We answers your questions…

Who currently gets winter fuel payments

At present, anyone born before September 22, 1958 (so currently aged 66) is entitled to receive help with their fuel bills during the winter months.

The winter fuel payment is worth between £100 and £300, and was paid to 11.3 million people in the 2022-23 tax year.

The amount you get is based on when you were born and your circumstances — for example, if you lived alone or with a partner — during the week beginning on the third Monday in September. This is called the ‘qualifying week’.

In a household where all the residents are under 80, the recipients get £200. If someone in the household is over the age of 80, the payment is increased to £300.

If you claim the state pension or another social security benefit, the payment should be made automatically each year.

Who will be able to claim this winter?

Starting this winter, if you live in England or Wales, there will be tighter requirements to receive the payment, Ms Reeves has announced. From now on, those who are not in receipt of pension credit or other means-tested benefits will no longer receive the payment.

In other words, you’ll only be able to get a winter fuel payment if you’re over state pension age and receive one of the following benefits: pension credit, income support, income-based jobseeker’s allowance, income-related employment and support allowance or universal credit.

Pension credit is a benefit for those over state pension age who are on low incomes to help with living costs. Around 1.4 million people received pension credit in August 2023, according to official figures. Two thirds of recipients were women.

The amount of winter fuel money paid out to those who are eligible will not change and nor will the criteria for pension credit, the Government has said.

How can I ensure I keep getting it?

If you already receive pension credit, then you will automatically continue to receive winter fuel payments and do not need to do anything.

If you do not already receive pension credit or the state pension, you will need to claim — but only if you’ve not had the winter fuel payment before. You’ll also need to make a claim if you have deferred your state pension since your last winter fuel payment.

But one in three pensioners entitled to pension credit don’t receive it, according to charity Independent Age. This is based on the Government’s estimates that up to 880,000 people who are eligible do not receive the payment.

Many of those who are over state pension age and in receipt of housing benefit, which helps you cover your rent if you’re living on a low income, should qualify for pension credit but do not receive it, for example.

Morgan Vine, the charity’s head of policy and influencing, says: ‘Pension credit has an unacceptably low uptake at just 63 per cent. 

This means a staggering 880,000 older people who are eligible could be missing out on money they need to turn their heating on.’

Pension credit tops up your weekly income to £218.15 if you’re single, or a joint weekly income of £332.95 if you have a partner.

If your income is below these thresholds, you should be eligible. When calculating your weekly income, the Government takes into consideration your state pension, other pensions, earnings from employment and self-employment, and most social security benefits, for example carer’s allowance.

Savings are also included in your income. If you have more than £10,000, every £500 over £10,000 counts as £1 of income a week. For example, if you have £11,000 in savings, this counts as £2 of income a week.

The amount of state pension you receive each week will dictate how much you can have in savings without exceeding the income threshold for pension credit.

You can apply for pension credit any time after you reach state pension age, currently 66, and your application can be backdated by three months. Apply online at apply-for-pension-credit.service.gov.uk/start, or you can do it over the phone by calling the pension credit claim line on 0800 99 1234.

You will need to supply you and your partner’s National Insurance number, details of income and pensions, as well as details of your savings and investments, usually for the past three months.

What can I do to make sure that I qualify?

Anyone on the current full state pension, with 35 years’ worth of National Insurance contributions, receives £221.20 a week. This puts them just £3 a week above the threshold to receive pension credit.

However, those with 34 years of contributions would fall within the upper limit and be entitled to both pension credit and the winter fuel payments.

Sir Steve Webb, a former pensions minister and now partner at consultancy LCP, says: ‘One consequence of the new rules is that people on low incomes will need to think twice before topping up their state pension if this might lead to them losing entitlement to a winter fuel payment.’

To ensure you get a full state pension, you can fill any gaps in your NI. You do this by ‘buying’ missing NI contributions at a flat rate. 

This is unlike the NI contributions employed workers make each month — known as Class 3 contributions — which are paid as a percentage of your income.

It costs £15.85 to buy one week’s worth, or around £824.20 for a year’s worth between 2006 and 2016. Currently, this boosts your state pension by £303 — £5.80 a week. That’s worth £6,060 over a 20-year retirement.

However, many may now have to weigh up the cost of doing so, as they may lose pension credit and the winter fuel payments each year, against how much they would gain in the state pension.

For example, by topping up their state pension to the full £221.20 a week, they will be £3 a week better off than on pension credit — equivalent to £152 a year or £3,040 over 20 years. 

But they will be £824.20 out of pocket after making the voluntary NI contribution and will miss out on up to £300 of winter fuel money a year. Over a 20-year period that could add up to a loss of £6,824.20.

This means, even though their weekly income is £3 a week higher than what they would receive on pension credit, they are still £3,824.20 down — even before accounting for other perks of pension credit. For instance, if you are over 75 and receive pension credit, you will also get a free TV licence, worth £169.50 this year.

Sir Steve also says it is crucial that people are not put off by the headline pension credit upper limit for income.

He says: ‘If money is tight, you’re on a modest income and you don’t have much of an income besides the state pension, you should put in an application anyway, because there are a lot of exceptions to the rules.’ 

For example, those with a disability have an extra income allowance, as does anyone who cares for a loved one.

‘If you would be getting carer’s allowance but for the fact that you are a pensioner, you get a premium of £45.60 per week on your pension credit,’ Sir Steve adds.

This is because carer’s allowance is not paid to anyone in receipt of the state pension, but those who continue to provide care have what is called an ‘underlying’ entitlement to carer’s allowance, and therefore can get the premium on pension credit.

To qualify for carer’s allowance you must spend at least 35 hours a week caring for someone. This can include helping with washing and cooking, taking the person you care for to a doctor’s appointment or assisting with household tasks, like managing bills and shopping. 

The person you care for must already get a benefit, such as a personal independence payment (PIP), disability living allowance (the middle or highest care rate), or attendance allowance. Your earnings must also be £151 or less a week after tax, National Insurance and expenses.

If you have a severe disability, you could get an extra £81.50 a week on top of your pension credit. 

To qualify, you must receive either attendance allowance, the middle or highest rate from the care component of disability living allowance, the daily living component of personal independence payment, armed forces independence payment or the daily living component of adult disability payment at the standard or enhanced rate.

Similarly, you should still fill in an application even if you have a substantial amount in savings. Your savings could affect the amount you receive in pension credit, but it is unlikely to automatically disqualify you unless it is a huge pot of money.

One common myth is that you cannot receive the state pension if you own a home, Sir Steve adds. ‘This isn’t true, so don’t be put off applying.’

Another little-known credit may help you to receive winter fuel payments. Savings credit, paid to those who reach state pension age before April 2016 and who saved some money for retirement — for example, a personal or workplace pension — can get up to £17.01 a week if they are single, or £19.04 a week if they have a partner.

This is an extra element of the pension credit and means that a private pension can take your weekly income a little above the £218 threshold and still receive a small amount of pension credit, Sir Steve explains.

He says: ‘As far as I can see, this would qualify you for your winter fuel payments.’

The tricks that DON’T work

You may consider gifting some of your savings to your family as an early inheritance, if it boosts your pension credit. However, this is unlikely to help, Sir Steve warns.

He explains: ‘Anything you do to artificially entitle yourself to benefits can be called out by the Department for Work and Pensions. 

So, if you decided to give £30,000 to your children after this announcement, the first question they would ask is where did the money go and do you really no longer have access to it.’

What will happen to energy bills?

Energy bills are due to swing upwards again this winter, rising by nearly 10 per cent according to most forecasts. 

This will coincide with more than 10 million pensioners being stripped of their winter fuel payments, leaving many without vital funding to heat their homes.

Ovo Energy is among the suppliers to have written to customers this week warning of a 9.3 per cent increase, to an average of £1,714 a year in October. 

Currently, the energy price cap, which controls what most households pay for energy and is re-calculated every three months, is set at £1,568 from July to the beginning of October.

Leading forecasters Cornwall Insight predict the cap will reach £1,723 in the final three months of the year — equivalent to a 9.8 per cent increase. This means that millions of pensioners will have to find up to £300 extra this winter in addition to rising energy bills.

Unlike last winter, pensioners will also no longer receive a cost-of-living payment worth between £150 and £300. 

This payment was set up to help older households during the energy crisis and a period of high inflation, but has been discontinued this year.

j.beard@dailymail.co.uk