Winter Fuel Payment warning as over 100,000 pensioners set to lose payment next year after state pension rise

Earlier this year, the Government announced that the Winter Fuel Payment will be restored to all people over state pension age with an income of £35,000 per year or less for the winter of 2025/26.

However, with this threshold frozen, new figures have shown every year more retirees will be cut out of the scheme, despite just qualifying again.

Steve Webb, partner at LCP, warned that the frozen threshold would progressively affect more retirees as their pensions naturally increase with inflation.

This could leave many older households struggling with heating costs during the coldest months, despite only modest gains in their income.

Figures from consultancy LCP show just how easily pensioners can be pushed over the Winter Fuel Payment threshold.

Take the example of a retiree currently on £33,600 a year, made up of the standard new state pension of £11,973 and a workplace pension of £21,627. Today, they qualify for the Winter Fuel Payment as their income sits below the £35,000 cut-off.

But from April 2026, routine increases will push them over the line. The state pension is due to rise by 4.7 per cent under the triple lock, lifting it to £12,535, while their workplace pension is forecast to climb by four per cent to £22,492.

That gives a total of £35,027, just £27 over the limit. Yet this tiny overshoot is enough to strip them of their Winter Fuel Payment, worth up to £300 depending on age.

Mr Webb explains it shows how frozen thresholds unfairly penalise retirees whose incomes only rise in line with inflation.

The situation has created what the pension expert has described as a "rollercoaster" experience for affected retirees, who have seen their entitlement repeatedly change over recent years.

These pensioners successfully claimed Winter Fuel Payments until 2023, when the benefit was initially withdrawn. They subsequently lost access to the scheme in 2024 following the introduction of means-testing requirements.

The payment was reinstated for this group in 2025 when authorities established the £35,000 income threshold for eligibility. However, these same individuals now face losing the support once more from 2026 as their pensions increase whilst the threshold remains static.

This pattern of gaining and losing entitlement is expected to continue annually, with ministers confirming they have no plans to adjust the £35,000 limit in subsequent years.

Mr Webb said: "The new £35,000 cut-off for Winter Fuel Payments is set to be frozen for years to come, meaning that the policy will bite progressively harder as inflation-linked increases in other pensions cause people to cross the £35,000 line."

He questioned the fairness of the system, noting that pension rises merely maintain living standards rather than representing genuine financial improvement.

He added: "Given that inflation-linked increases are simply designed to maintain people's standard of living, it is hard to see why they should be treated as making people 'better off' and hence less deserving of a Winter Fuel Payment."

Winter Fuel Payments will be £200 per household or £300 for households where at least one person is aged 80 or over. Payments will be made to the main claimant who is receiving a means-tested benefit such as Pension Credit.

Where there is no means-tested benefit in payment, a shared payment will be made to couples. For example, where both partners in a couple are over 80, they will receive £150 each.

DWP will develop a system to allow people to opt out from receiving the Winter Fuel Payment removing the need for HMRC to recover the payment.