BBC sources optimistically suggest that the decision to bundle in a free TV licence will drive uptake of the wider benefit.
But that would have cost £745m, a fifth of the BBC's budget, by 2021/22, while the new scheme will cost the BBC around £250 million by 2021/22 depending on the take-up.
The corporation has been accused of doing the Government's cost-cutting "dirty work".
While many supported copying the Government's concession - so that all over 75s received a free TV licence - there was also strong support for reform.
On TV licences I gather they later said this was a mistake.
"It should not be an agency for means-testing pensioners". Although some 900,000 households might still qualify under the new means tested rules.
Warning that older people who rely on TV for companionship will have found today's announcement "distressing", Mr Lynch said: "This is really disappointing news which will affect over 75,000 people over the age of 75 living in Northern Ireland".
He added that the move could potentially "increase isolation" of some pensioners "and have a negative impact on their mental health".
It comes after the board of the BBC announced yesterday they would be scrapped in the United Kingdom from June 2020.
The licence-fees are set to be means-tested from June 2020, meaning households without someone who receives Pension Credit will now have to pay the licence. Around 3.7 million pensioners will lose out, it is thought. A consultation was launched at the end of 2018, with the BBC arguing that many over-75s were increasingly wealthy and it could not afford the cost of providing them with a service for free.
The broadcaster has said that if it bore the full financial burden of the free licences, the extra cost would have meant "unprecedented closures".
"We already know that 650,000 of the poorest pensioner households are eligible, but do not claim Pension Credit".
Jan Shortt, of the National Pensioners Convention, condemned the move.
According to her official spokesman, Prime Minister Theresa May was "very disappointed" with the BBC's decision and has urged it to look again at ways of supporting older people. "It's an absolute disgrace".
But The Intergenerational Foundation, which aims to improve intergenerational fairness, said: "There is simply no reason why retired judges, lawyers, bankers and doctors should receive a free TV licence when younger generations are struggling financially".
There were fears that numerous poorest pensioners may not receive their free licence since only 62 per cent of eligible households now claim Pension Credit.
"We at the DCMS Committee will continue to monitor the BBC, and in particular the impact that this cost will have on the BBC's future and its programming".