State pensioners face just £3 a week rise in April after Winter Fuel Payment cuts

Millions of state pensioners will end up with just an extra £3 a week from next April once the Winter Fuel Payment cuts are taken into account, analysts have warned. The full amount of the New State Pension is set to rise by £460 from next April but with 10 million older people no longer eligible for the fuel allowance of up to £300, that will effectively be reduced to £160 - equivalent to an extra £3.07 per week.

For those losing out on the £200 lower level of fuel allowance, this will mean the rise being reduced to £260 or £5 a week.

While the State Pension uprating is the lowest increase for nearly four years, it means the New State Pension - for those reaching pension age after April 2016 - will go up from £11,502.40 to £11,962.60 a year from next April, a rise of £460. Meanwhile, someone on the full rate of the old, pre-2016 Basic State Pension will see a rise from £8,814 to £9,167 per year, an annual increase of £353. Removing the maximum £300 Winter Fuel Payment from that leaves an increase of just £53 a year, or just over £1 a week.

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Under the triple lock guarantee, the State Pension increases every April in line with whichever is the highest of average total earnings growth from May to July in the previous year, CPI inflation in September the previous year, or 2.5 per cent. The dominant factor was pay growth of 4 per cent.

Sir Steve Webb, a partner at consultants LCP (Lane Clark & Peacock) and a former pensions minister, said: “Part of next April's increase is simply to keep pace with rising prices. Based on the current inflation figure of 2.2 per cent, the New State Pension would need to rise by just over £250 simply for pensioners to stand still.

"Whilst an above-inflation increase of £460 will be welcomed, only the further £210 represents a real increase. And this is before allowing for the income tax which most pensioners will pay on their State Pension rise. Those who lose £200 or £300 in winter fuel payments will therefore still be worse off in real terms next April."

Alice Haine, Personal Finance Analyst at Bestinvest by Evelyn Partners, said: "The Government's plans to scrap Winter Fuel Payments for all by the poorest pensioners will go ahead after 348 MPs backed the proposal, with the 228 MPs voting against it failing to block the motion.

"The payment will now be means-tested, something that could leave some of the most vulnerable members of society forced to choose between eating and heating this winter. The payments of up to £300 were previously paid out to 10 million pensioners but Labour is sticking to its plan for the universal payment to be restricted despite intense opposition, even from within its own party."

She added: "Applications for Pension Credit may have surged, but not everyone that applies will be eligible and many may still be unaware they could qualify for extra support. Those just skimming above the eligibility criteria for Pension Credit are likely to suffer the most this winter, particularly as the payment is being stopped with immediate effect.

"Pensioners on the New State Pension may be looking at a £460 annual uplift from April next year after average total pay, including bonuses, grew 4 per cent in the months to September, a metric used to determine the triple lock calculation – but that equates to an increase of just £8.85 a week. Once the Winter Fuel Payment is stripped out, it means pensioners will only receive an annual uplift of £160 from April 2025, which equates to an weekly increase of just over £3."

Ms Haine continued: "Naturally, it makes sense for the wealthiest members of society to no longer receive an extra sum to cover their fuel bills but limiting this payment to only the very poorest pensioners risks stretching the budgets of those just managing to make ends meet. Energy bills will increase from October 1 when the Energy Price Cap (EPC) rises by 10 per cent to £1,717 per year, with expectations it will remain high for the rest of the winter. This makes the loss of the Winter Fuel Payment even harder to take.

"Unlike workers who can hunt for a better-paying job or take on extra work to cover a household budget shortfall, pensioners are typically on fixed incomes determined by their State Pension and private pension income. Only handing out the payment to those on benefits places those whose incomes sit just above that level at risk of fuel poverty."

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