Pension Credit claimants can get £150 off electricity bills through the Warm Home Discount Scheme (Image: Getty)
State pensioners on a low income can get an automatic £150 boost from the government, on top of a VAT cut announced by Andy Burnham this week.
The new Prime Minister has announced an £850 million tax cut on energy bills to help ease the cost of living, meaning from October 1 electricity bills will be VAT free for six months. The move is expected to save households around £45 per year and is being funded in part by scrapping his predecessor Sir Keir Starmer’s digital ID project, which had been estimated to cost around £600 million per year over three years. The VAT cut will come as a welcome relief for many households as bills are forecast to remain high throughout the winter, but some pensioners can ease the cost of energy bills even further with a single claim.
Pensioners on a low income can apply for Pension Credit from the Department for Work and Pensions (DWP) to help with living costs and, in turn, can also open the door to cheaper energy bills.
Pensioners in England, Wales and Scotland on a low income who get the Guarantee Credit element of Pension Credit are eligible for the Warm Home Discount Scheme, which provides a one-off £150 discount off electricity bills.
This amount is automatically applied to your bill by your electricity supplier and there are currently 28 energy suppliers part of the scheme, including major firms like British Gas, E.ON Next, EDF, Octopus Energy, OVO and ScottishPower.
According to the latest government statistics, only 62% of entitled pensioners are currently claiming Pension Credit, so take-up for the benefit remains relatively low across the UK.
This leaves up to an estimated £2.5 billion unclaimed funds annually, which amounts to around £2,600 per year for each claimant entitled to receive it who didn’t claim it.
But it’s not just a 4.8% uplift this tax year that makes Pension Credit worth claiming, as the benefit also acts as a gateway to other valuable entitlements, including help with housing costs, a Council Tax reduction, free TV licences for those over 75 and, of course, access to the Warm Home Discount scheme.
Commenting on the benefits of claiming Pension Credit, Des Cooney, retirement planning specialist at Axis Financial Consultants, said: “A £150 automatic discount is a meaningful sum for retirees living on a fixed income, yet many eligible state pensioners simply don’t know it exists because they haven’t claimed the qualifying benefit in the first place.
“Pension Credit, for example, is consistently one of the most underclaimed entitlements in the UK — and unlocking it doesn’t just bring in that direct payment; it can act as a gateway to a whole range of additional support.
“Anyone approaching or in retirement should treat a benefits entitlement check as a core part of their financial planning, not an afterthought.”
The new PM inherits the current Warm Home Discount Scheme, which is due to reopen in October with the discount applied to bills by March 31, 2027.
Any changes to the scheme are unlikely meaning the £150 discount is expected to roll out as planned to households later this year under Burnham’s government. If a change is made, this would likely be announced in the Autumn Budget, which is expected to take place in late October or early November.
Burnham said in the first meeting of his Cabinet earlier this week that he will lead a “cost of living government” and wants to give people “a sense that help is coming”, so removing the £150 discount from pensioners would be unlikely.
The PM said: “Westminster has not been working for people for too long, with families struggling with the cost of living. That needs to change.
“I said I wanted to give people breathing space, and that’s what I’m announcing on my second day as Prime Minister. We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.”