JRF: Government must protect pensioners from changes to Winter Fuel Payment which risk pushing more into poverty

Ahead of a vote in the Commons on Tuesday (10 September) on the Government's plans to change eligibility for the winter fuel payment, we set out in this factsheet what we know about pensioner poverty, and why there's a risk targeting too tightly could increase pensioner poverty.

Background

The Government wants to change the winter fuel payment scheme so only people claiming Pension Credit are eligible for it. It claims over one million pensioners will still receive the payment after these changes.¹

These changes will apply to England and Wales. The Scottish Government and Northern Irish Executive will also stop providing the winter fuel allowance to all pensioners.

Pensioner poverty

• One in six pensioners are in poverty in the latest data covering 2022/23 - 16% or 1.9 million. Relative pensioner poverty fell from 25% to 13% between 2002-2011, but it has increased by three percentage points since 2012/13.²
  
  
• Were Winter Fuel Payment eligibility restricted in 2022/23 in the way the Government is planning to this winter, an extra 100,000 pensioners would have been in poverty, pushing the total number to 2 million. This would have increased the pensioner poverty rate by one percentage point to 17%.
  
  
• More than a quarter of pensioners claiming means-tested benefits, mainly Pension Credit, are in poverty (27%) meaning they are 1.6x more likely to be in poverty than pensioners as a whole. Around 60% of recipients are in the poorest 40% of the income distribution.
  
  
• Even with everyone eligible taking up Pension Credit, it could be that only around 36% of pensioners in poverty will receive the Winter Fuel Payment ^3. This is because the rising state pension has meant fewer pensioners are eligible for Pension Credit.

What can the Government do to prevent pensioner poverty rising?

• Improve uptake of Pension Credit through public information campaigning and other means to make sure people aren't missing out on support they are eligible for.
  
  
• If government is going to end universal winter fuel payments and doesn't want pensioner poverty to rise, it needs to do more than just keep paying the Winter Fuel Payment to people receiving Pension Credit. Targeted coverage could be improved through the council tax system by targeting a payment at pensioners in either bands A-B or A-D housing.
  
  
• Pensioners in bands A-B have only slightly lower poverty rates than pensioners in receipt of pension credit, while targeting bands A-D is likely to capture over 80% of pensioners in poverty. (extending eligibility to council tax bands A-D means almost 8 times the number receiving pension credit would be eligible, so savings would be much less. Using bands A-B would quadruple the size of the eligible group.)
• The Government could also consider targeting pensioners already receiving housing benefit and council tax support.

Notes to Editors

1. Sign up for pension credit doubles after being made requirement for winter fuel payment | Politics News | Sky News
2. Very weak income growth for poor pensioners has meant rising pensioner poverty since 2011 | Institute for Fiscal Studies (ifs.org.uk)
3. This scales up published means-tested benefit coverage of the pensioner poverty population by the known benefit undercount in the survey and then assumes that the take up of benefits are the same below and above the poverty line.  Even if we assume all the undercount and all the pensioners not claiming means tested benefits are in poverty, we still do not get up to full population of pensioners in poverty.