Some pensioners face a price shock of between £300 and £450 this winter because of the dual-effect of rising energy bills and the loss of the winter fuel allowance.
In July, Chancellor Rachel Reeves said the payments, which land in November and December and are worth between £200 and £300 a year, would be scrapped for those not in receipt of pension credit or other means-tested benefits.
This month, energy prices for most households have also risen. Ofgem, the energy regulator, has increased the energy price cap, which most tariffs follow, by 10 per cent, meaning the average home will see an annual rise of £149.
The two issues coming at the same time means that pensioners who are just above the threshold for receiving pension credit face a financial hit of up to £450, according to experts.
Jon Greer, head of retirement policy at Quilter, said: “Though it was recently confirmed that the state pension will rise by 4 per cent, or just over £460, this will not come in to effect until next April.
“As such, for those pensioners who are already facing a £200 or £300 cut to their income this winter following the Labour Government’s decision to scrap the winter fuel allowance, this could result in a combined financial hit of as much as £349 or £449 this winter.
“The recent changes mean it has never been more important that pensioners on low incomes who are worried about paying their bills check their eligibility for pension credit as the winter fuel payment is now contingent on you claiming the credit or other means-tested benefits.
“Though there has been an increase in applications, there are still many pensioners missing out on claiming pension credits which could have a significant impact on their retirement income.”
Sir Steve Webb, former pensions minister and now a partner at LCP, said that though pensioners may be fewer than a typical household, they were also more likely to be at home more often and more likely to feel the cold.
He said: “The exact impact will vary from household to household, but pensioners could easily be losing anything from £300 to £450 per year from a combination of higher bills and loss of winter fuel payments.
“For those just above benefit levels, this winter could be especially challenging, and we must ensure that anyone who could qualify for pension credit takes up their entitlement”.
There is however some good news. Despite October’s bill increase, new predictions from analysts Cornwall Insight suggest the cap will fall in January.
It is reviewed every three months by Ofgem to keep pace with the change in energy wholesale prices. The forecasts suggest there will be a 1 per cent fall in January to an annual £1,697 for a typical dual fuel consumer.
It is expected to fall further throughout the rest of 2025.
Are you eligible for pension credit and how to claim
Pension credit is complicated, so rather than trying to work out of you can get it, you can use the government’s free pension credit calculator, which is available on gov.uk.
To do this, it’s easiest if you have details of your current earnings, benefits and pensions to hand (for you and your partner if you live with them). It’ll then give an instant estimate of how much you’re due.
Or if you’d rather talk to someone about it, there are numerous free government helplines you can call to talk it through. Again, it’s best with details to hand.
In England, Wales and Scotland, the pension service helpline is 0800 731 0469. In Northern Ireland, it’s 0808 100 6165.
Pension credit not only guarantees a weekly income to £218.15 if you’re single or £332.95 if you have a partner – and it also opens the door to a variety of other benefits, such as free TV licences.
How do I apply if I am eligible?
To claim, you can either do so online at gov.uk or call the pension credit claim line on 0800 99 1234 and they can fill in the application for you over the phone (lines are open Monday to Friday, 8am-6pm).
You’ll need the following information about you and your partner if you have one:
- National insurance number
- Information about any income, savings and investments you have
- Information about your income, savings and investments on the date you want to backdate your application to (usually three months ago or the date you reached state pension age)
- You’ll also need your bank account details. Depending on how you apply, you may also be asked for your bank or building society name, sort code and account number.
