- Pension Credit claims since Chancellor Rachel Reeves’ Winter Fuel Payment announcement on 29 July 2024 are up 51% compared to the same period from 2023-24, new figures reveal (Pension Credit applications and awards: May 2025 – GOV.UK)
- Successful claims are up 57%, with an additional 58,800 recipients awarded Pension Credit
- The number of claims not awarded has doubled compared with the same period a year earlier, with 146,000 claims rejected between 29 July 2024 and 25 May 2025
- Government has announced plans to restore the Winter Fuel Payment to some pensioner households, although it is yet to confirm the details
- Net outcome could see the government spending more on pensioner benefits than it did before the Winter Fuel Payment debacle
- Pension Credit has historically been chronically underclaimed, with over a third of those eligible failing to fill out the relevant forms each year*
Tom Selby, AJ Bell director of public policy, comments:
“The furore over Rachel Reeves’ decision to scrap the Winter Fuel Payment for all but the lowest income pensioners has created a political nightmare for the government, with the issue repeatedly raised on the doorstep during the local elections and seized upon by Labour’s opponents. What’s more, the dramatic rise in Pension Credit applications following the change will eat into the already limited savings the chancellor expected to make from the policy.
“At the time of the announcement government said it wanted to ensure Pension Credit was being claimed by every eligible pensioner, with previous estimates suggesting around 800,000 were already failing to claim the benefit. Today’s evidence shows claims for Pension Credit have indeed surged, with around 59,000 extra claims accepted since the Winter Fuel Payment announcement last summer, when compared with the same period a year earlier.
“However, there are still a huge number of people claiming for Pension Credit and finding their application rejected. While it makes sense to submit a claim if you’re close to the eligibility threshold and aren’t quite sure whether you’re eligible, the large number of rejected claims suggests there is still widespread misunderstanding of the eligibility rules.”
Winter Fuel Payment U-turn
“After months of political pressure, the government has finally accepted it needs to look again at the decision to limit the Winter Fuel Payment to Pension Credit recipients. It will hope to put the issue to bed at the Autumn Budget, giving pensioners certainty ahead of the colder months and dampening some of the attacks the government has been on the end of since its announcement last summer. However, it now faces a dilemma in determining exactly who should be eligible.
“One option on the table is to award the payment to everyone receiving a state pension, clawing the money back from higher income households, potentially through their tax returns. This might look something like the process for clawing back child benefit for working households, although that has caused mass confusion among taxpayers bamboozled by the complexity of the rules.
“It’s entirely possible government simply decides that means testing the Winter Fuel Payment without linking it to another existing benefit is just too complex to administer effectively.
“If it is forced to reverse entirely and restore the Winter Fuel Payment as a universal benefit then the net result will be a cost to the Treasury, courtesy of the rising Pension Credit bill. Albeit the government would surely argue that boosting Pension Credit uptake is a worthy outcome anyway, regardless of the Winter Fuel Payment issue.”
Claiming pension credit
For those on low incomes, who are over state pension age, claiming Pension Credit can offer a valuable additional income top-up. If you live alone and have a weekly income of less than £227.10 (just over £11,800 a year) then you’ll be eligible for Pension Credit. The same applies to a couple with an income of £346.60 per week, equivalent to just over £18,000 a year.
If you can demonstrate your income is below that threshold then Pension Credit effectively tops you up to that level. For someone living on their own with an income of £217 a week, Pension Credit will provide an additional £10 a week to supplement their income, taking it up to the Pension Credit threshold. Your income includes your state pension, other private pensions, employment or self-employment earnings and most social security benefits.
Pension Credit has historically been underclaimed, with many people not realising they may be entitled to the payments and failing to claim. Pension Credit won’t be paid automatically, so you have to submit a claim through the DWP, which can be done online or over the phone. If you’re unsure whether to claim because you’re close to the income threshold, there’s no harm in submitting a claim – the worse that can happen is you find you’re not eligible.
*Source: Income-related benefits: estimates of take-up: financial year ending 2023 - GOV.UK
