The Government’s decision to reinstate winter fuel payments for millions of pensioners has been welcomed, but commentators said there are lessons to learn from the U-turn.
Nine million pensioners will receive the payments this winter as pensioners in England and Wales with an income of £35,000 or less per year benefit.
The payments were previously linked to pension credit, with the Government arguing this would help to balance a “black hole” in public finances.
Jon Greer, head of retirement policy at wealth manager Quilter, said: “While restricting payments to those on pension credit may have appeared fiscally responsible, it underestimated both the administrative burden and the strength of feeling such changes provoke among pensioners.”
He added: “The lesson here is that if Government wants to better target support, it must do so with careful planning, adequate resourcing and a clear communication strategy.
“It also throws into sharp relief the growing tension around the state pension triple lock (which is used to increase the state pension).
“There is a strong case to say the triple lock is no longer fit for purpose, yet this episode has shown just how radioactive any attempt at reform has become.”
SNP Westminster leader Stephen Flynn MP said: “This screeching u-turn was inevitable and lessons must be learnt from the damaging mess the Labour Government caused by robbing pensioners of their winter fuel payments.”
NEWS! Winter Fuel Payment to be reintroduced for all state pensioners but clawed back through tax if you earn £35,000+.
— Martin Lewis (@MartinSLewis) June 9, 2025
My instant analysis of how it works, what it means and is it an improvement.
(Still working on subtitled version, I will post a link to it in reply to this… pic.twitter.com/NjkFxGbKwN
In a video posted on X, consumer champion Martin Lewis said: “Do I think this is an improvement? Spoiler, yes, very much so.”
He added that the previous threshold set last winter was “just far too low and left many people on still very low incomes earning just above the threshold missing out”.
He said moving it to £35,000 “which is much more equivalent to average income is a big improvement and should lead to three in four state pensioners getting a payment, according to the Government numbers. So yes, that’s worthwhile.”
Mr Lewis said that pension credit had long been under-claimed, “so linking winter fuel payments to pension credit was in my view flawed.
“And even now, there are 700,000 eligible state pensioners on very low incomes who should be getting pension credit who don’t, which also means they miss out on winter fuel payment.
“Well that’s gone, because now every state pensioner household will get this by default unless they choose to opt out of it, which means those vulnerable households who are least likely to act will automatically get it.”
Mr Lewis said the move means: “Far more pensioners who were struggling with still high energy bills will get this payment.
“I feel relieved, that’s my instant reaction to the news.”
Unison general secretary Christina McAnea said: “This is the right thing to do. The Government acknowledges it made a mistake.
“Restoring the fuel payment to all but the wealthiest pensioners will make a huge difference to anyone who struggled to keep warm last winter.”
Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “The partial u-turn on the winter fuel payment will make a huge difference to the finances of some of the lowest-earning pensioners, who had missed out by a hair’s breadth by earning fractionally too much to qualify for pension credit.”
Independent Age chief executive Joanna Elson said: “Our helpline receives thousands of calls from older people making drastic cutbacks just to get by and the changes to the winter fuel payment made this worse.
“For millions living on low incomes, the entitlement supports them to turn their heating on and stock up on food during the colder months.”
Caroline Abrahams, charity director at Age UK, said: “At Age UK we heard from many through the winter who were so frightened about their bills that they didn’t even try to keep their homes adequately warm.”
Chancellor Rachel Reeves said the Government had “listened to people’s concerns” about the decision to limit the payment last winter.
But some commentators questioned whether the admin created by excluding some pensioners from entitlement to winter fuel payments was worth it.
Pensioners who are above the £35,000 threshold will have the full amount of the winter fuel payment they received automatically collected via PAYE (pay as you earn), or via their self-assessment return.
A simple system will also be set up for those who want to opt out from receiving the winter fuel payment, the Government has said, removing the need for HM Revenue and Customs (HMRC) to recover the payment.
Rachel Vahey, head of public policy at AJ Bell, said: “This not only creates tax chaos for over a million people but it creates a cottage industry for Government to impose the clawback, creating additional admin which will cut into the estimated £450 million saving to taxpayers.”
She added: “This farcical situation could lead to pensioner panic. Many will be scrabbling to make sure their income dips under the critical £35,000 limit.
“Given the chaos it could cause and the relatively tiny taxpayer savings on offer, it may have made sense for the Government to take the political embarrassment of a U-turn on the chin and make the payment to all pensioners.”
Alex Clegg, an economist at the Resolution Foundation, said: “The new scheme for means testing winter fuel payments means that that the number of pensioners receiving support will rise from 1.3 million last winter to around nine million this winter, and not far off the 11.6 million who received winter fuel payments two winters ago when they were universal.”
He added: “The new means test will create new complexity in the tax system, including a cliff edge for those with around £35,000 of income. The reported savings of £450 million will be reduced further by the cost of increased pension credit take-up as a result of the original policy, and the cost of administering the new means test.”
