Martin Lewis gives his verdict on Labour's winter fuel payment U-turn

Yahoo

5 hours ago

Money expert Martin Lewis has given his verdict on Labour's decision to partially reverse its changes to the annual winter fuel payment for pensioners.
Chancellor Rachel Reeves has confirmed that while the payment will still not be paid to all pensioners as in previous years, it will be extended to far more than last winter.
Around nine million more pensioners should get the payment as a result of the change – meaning about three quarters of pensioners overall are now eligible.
Announcing the change, Ms Reeves said: 'Targeting winter fuel payments was a tough decision, but the right decision because of the inheritance we had been left by the previous government.
'It is also right that we continue to means-test this payment so that it is targeted and fair, rather than restoring eligibility to everyone including the wealthiest.
'But we have now acted to expand the eligibility of the winter fuel payment so no pensioner on a lower income will miss out.'
The change essentially raises the threshold for receiving the payment from £11,600, plus the need to be claiming Pension Credit, to £35,000 with no additional requirements.
Reacting to the news, Mr Lewis said the change is a 'very big improvement', but highlighted a piece of key information pensioners should be aware of regarding the decision.
Crucially, pensioners with an income of over £35,000 will see their winter fuel payment 'clawed back' through the tax system (unless they opt out). But this can bring some slightly complicated rules for households with more than one pensioner which it may be helpful to understand.
Mr Lewis gives an example: "You've got a household that's due to get £300 with two state pensioners in. That £300 for the clawback is treated as £150 and £150.
'So if this person earns over £35,000, they lose it. If this person earns under £35,000, they keep it; they still get £150. If both of them earn over £35,000, they both lose it. And if both of them earn under £35,000, they both keep it.'
This is a relatively 'good system,' The Money Saving Expert founder says, as it means only one pensioner's income won't decide whether the entire payment is kept or not.
Mr Lewis also said that he is 'very grateful to the Chancellor' for the decision, adding: 'This is a very big improvement on what we already had, and it does mean there's still a means test in place.'
"And many people said they don't want millionaires and billionaires to get the Winter Fuel Payment. Well, they won't get the Winter Fuel Payment, they can either opt out or have it clawed back through the tax system.
'But it means far more pensioners who were struggling with still-high energy bills will get this payment.'