Retired British expats are due to collect an unexpected £200 a year windfall along with their state pensions.
Following a successful landmark ruling at the European Court of Justice, pensioners living outside the UK receiving the state pension must be paid the winter fuel payment.
The case was brought by an elderly expat in Switzerland who claimed the British government was unfair by not paying the allowance to all pensioners – even if they left the UK decades ago.
The case could cost the British government millions, as around 445,000 expat pensioners live overseas.
Currently, only 73,000 expats qualify for the fuel payment at a cost of £15 million a year, because the Department of Work and Pensions would only pay the allowance to pensioners who lived in the UK until they retired.
Now, the government must pay everyone living in the European Union and a handful of other countries who receive state pension regardless of when they left the UK, which could make the bill soar to £90 million.
Work and Pensions Secretary Iain Duncan Smith is planning to get round the ruling by creating a rule for eligibility based on temperature
“We will fight these ridiculous EU rules. It is ludicrous we could have to pay more pensioners living in hot countries,” he said.
Households with someone on a state pension qualifies for the £200, while those with someone over 80 get £300.
Meanwhile, plans are underway to extend a charity campaign that raised more than £2 million from well-off pensioners who donated their winter fuel allowance to Saga, the financial firm for the over 50s and elderly.
Many wealthy film stars and celebrities handed over their allowance to help less wealthy pensioners heat their homes last winter. Donors included actress Helen Mirren and entertainer Bruce Forsyth.
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