Winter fuel payments will extend to everyone over the state pension age with an income of or below £35,000 a year, Chancellor Rachel Reeves has announced.
The Treasury said the change will cost around £1.25bn in England and Wales but still save £450m if the universal allowance had been kept.
Politics Live: Chancellor makes winter fuel announcement
Dropping the benefit for all pensioners was one of the first things Labour did in government, despite it not being in their manifesto.
The change meant only those on pension credit or other benefits were eligible – a deeply unpopular move that was widely blamed on the party’s poor performance in May’s local elections.
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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 government signalled its intention to widen eligibility last month, but no detail was given on what the new threshold might look like.
It is still not clear how the new policy will be funded, with the costs to be accounted for in the autumn budget.
The Treasury said that by setting the threshold at an income of £35,000, over three-quarters of pensioners – around nine million people – will benefit.
They described the new threshold as being above the income level of pensioners in poverty and broadly in line with average earnings, “balancing support for lower income pensioners with fairness to the taxpayer”.
No pensioner will need to take any action as they will automatically receive the payment this winter.
