State pensioners in for £1,700 boost following Winter Fuel Payment shake-up
Struggling pensioners will be £1,700 better off despite losing their winter fuel allowance, it has been claimed. Despite around 10 million retired Brits losing out on the £300 Winter Fuel Payments this year, Chancellor Rachel Reeves has said she will look after pensioners amid the cost-of-living crisis after confirming the triple lock will be maintained.
The arrangement ensures the state pension increases every year by either 2.5 per cent, the rate of inflation or earnings growth - or whichever is the highest figure. From April 2025, those on the New State Pension will see their annual income increase by £460 - rising from £11,502 to around £11,962.
According to Baroness Sherlock, Parliamentary Under-Secretary of State for Work and Pensions, this will result in a £1,700 boost over the next five years. However, not everybody will get the full amount as those who retired before April 2016 and receive the old Basic State Pension, will only see an annual increase of £353 next year, reports Birmingham Live.
Critics also argue the increase in payments could push certain pensioners over the tax-free allowance, meaning their disposable income will get eaten away at by HMRC. Jonathan Cribb, head of retirement and savings at the Institute for Fiscal Studies (IFS), agrees the boost isn't as generous as one might first think due to rising prices.
He said: "A £1,700 per year cash-terms increase in the value of a new state pension between now and 2029 is consistent with OBR forecasts for the next five years and keeping the triple lock," he told the Telegraph. "But of the £1,700 rise, around £1,050 of that is just keeping up with expected inflation, meaning it looks more like a £650 increase in real terms, and a smaller increase still relative to average earnings."
As for the Winter Fuel Payments, only those on Pension Credit or other means-tested benefits will be eligible. All pensioners are slated to get a letter next month outlining the changes in rules this year. Usually, the scheme provided a £100-£300 boost for pensioners to spend on heating their homes during the colder months.
The blow comes as Ofgem announced its October energy price cap will be set an average of £1,717 a year for a typical dual-fuel household paying by direct debit. This is around a 10 per cent increase per household or £149 per year. Standing charges have also increased marginally, to 31p per day for gas and 61p per day for electricity.
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