New claims for Pension Credit in 2025 will eat into the planned savings from the Winter Fuel Payment cut

With the deadline for applying for Pension Credit and getting the Winter Fuel Payment alongside it now passed, Policy in Practice estimates the number of additional claims made for Pension Credit since the announcement. We estimate that there will have been 57,000 additional claims for Pension Credit since the announcement on Winter Fuel Payments.

The DWP budgeted for 95,000 additional claims in the financial year. This would leave the Government on track to make its savings while leaving some 100,000 of the poorest pensioners £4,000 per year better off. However, many of these pensioners will be able to access additional Treasury Funded support, including Housing Benefit, Council Tax Support, Warm Home Discount, Free Prescriptions and more alongside with WFP. The average increase in spend per Pensioner is likely to be £6,800 per year (rather than the £3,900 estimated by the Treasury). If this higher spend per Pension Credit claim is correct, then the government will have spent the budgeted-for increase in claims this week.

With the deadline for applying for Pension Credit and getting the Winter Fuel Payment alongside it now passed, we can now estimate the number of additional claims made for Pension Credit.

The government has said that it wants to see claims for Pension Credit rise, and has carried out a range of promotional and awareness campaigns encouraging people to apply. They have also published statistics on the number of additional claims for Pension Credit since limiting access to the Winter Fuel Payment to people in receipt of Pension Credit.

Policy in Practice has been helping local authorities contact Pensioners missing out on Pension Credit for a number of years, and since the announcement has been using its LIFT platform to identify pensioners just above the Pension Credit threshold, as was covered on BBC’s Moneybox just before Christmas.

The latest figures show that the award rate has fallen from 58% before the announcement to 44% after, and that there is a growing backlog of claims, with 35% of claims made since the announcement yet to be cleared. To the DWPs credit an additional 500 staff have been allocated to clear the backlog, and they seem to be making a difference with the clearance rate rising from a low of 47% to 93% in recent weeks, though the rate will need to increase above 100% for the backlog to clear.

We have written about these statistics before, highlighting how the additional claims for Pension Credit will lower the savings from the Winter Fuel Payment cut, with the upside of higher incomes which will lower social care costs and improve the health and wellbeing for the poorest pensioners.

The savings the government can expect from the Winter Fuel Payment cut is dependent on how many additional Pension Credit claims are awarded compared to the pre-announcement trend.

The DWP statistics show the total applications made, the proportion cleared, and what proportion of these cleared claims have been successful. As we only have figures up until the week of November 11th, for subsequent weeks we took the average of the past four weeks, and applied the award rate to claims yet to be cleared to determine the expected number of awards above the trend rate prior to the announcement.

There have been a total of 220,000 applications made since the cut to Winter Fuel Payments was announced. 45% of cleared claims have been successful, so we expect that around 99,000 of these applications will be successful.

We get to 57,000 additional claims by comparing the 99,000 successful applications after the announcement to the pre-announcement trend of Pension Credit awards, when there were 89,300 applications made with 41,800 successful applications.

The planned savings from Winter Fuel Payments took into account an expected 95,000 additional Pension Credit claims. They based this figure off the average Pension Credit award of £3,900. This would put the DWP 60% of the way to their budget for increase in successful Pension Credit applications, 62% of the way into the financial year since the announcement. So far so good.

However, a successful Pension Credit application can open up access to other support paid for by the Treasury, such as Housing Benefit, Council Tax Support, Warm Home Discount, Free Prescriptions and more, alongside the Winter Fuel Payment. Including these passported benefits would mean that a successful Pension Credit application leads to an average total award of £6,799. Note that this excludes support available to Pensioners in receipt of Pension Credit, such as the free TV license, or social tariffs from their utility company which pensioners should be encouraged to claim.

The table below shows that if we take Pension Credit and other passported benefits into account by using the £6,799 figure, the DWP has hit its planned increase in Pension Credit claims this week. A big win for all of the take-up work being undertaken by local authorities and third sector partners, backed by DWP. However, it means that any additional claims for Pension Credit in 2025 will eat into the planned savings from the Winter Fuel Payment cut.

• The government budgeted £370.5m (95,000 x £3,900) for the increase in Pension Credit as a result of the WFP announcement.
• Our best estimates of current claims to date is £387.6m (56,939 x £6,799). This factors in the clearance rate and success rate of claims on a weekly basis, with figures compared to the pre-announcement trend.
• This means that if all treasury funded passported benefits are taken into account, then the government has spent the budgeted-for increase and any further claims in 2025 will begin to eat into the £1.4bn of savings.

The take-up rate for Pension Credit before the Winter Fuel Payment announcement had risen from 63% (with an incredible 880,000 Pensioners missing out) to 65%. For the savings from the Winter Fuel Payment to be completely eliminated by the increase in Pension Credit take-up, we estimate that the take-up rate would need to rise to at least 74%, factoring in the increase in passported benefits alongside the Pension Credit award.

While an increase in take-up to 74% isn’t impossible, it’s unlikely. Even targeted take-up efforts using Housing Benefit data would only reach around 200,000 pensioners.

That said, it’s well worth continuing take-up efforts as it means that more of the poorest pensioners will get the financial support they need. We believe getting support to low income pensioners will lead to lower social care costs, knock on savings to the health system and a societal boost to pensioners’ ability to stay healthy, active and warm for longer.

It’s great news that more pensioners are getting the financial support they need. The increased income for some of the country’s poorest elderly citizens can have wider benefits, providing much needed relief during a cost of living crisis.

Policy in Practice has seen unprecedented demand, helping one in four local authorities to run Pension Credit take up campaigns in the lead up to Christmas. We’ve also been using data to target the Household Support Fund to Pensioners just missing out on the Pension Credit threshold. It has meant a life changing boost in income for hundreds of thousands of pensioners living in poverty.

Deven Ghelani, Director of Policy in Practice

• Find out how much Pension Credit is unclaimed in your area and how many pensioners have income just above the Pension Credit threshold here
• Learn how LIFT is helping one in five local authorities to run Pension Credit take up campaigns. Details here
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