The number of people claiming pension credit, an income top-up for the poorest people in retirement, fell by nearly 100,000 over the past year, prompting calls for the government to do more to boost take up of the benefit.
The Department for Work and Pensions (DWP) said 1.6m people received pension credit in August 2019, which amounted to a reduction of 94,000 against the previous year.
Pension credit is a means-tested benefit paid to people on low incomes who are over state pension age (currently 65, but rising to 66). Nearly two- thirds of current claimants are women. Complexity over entitlement to pension credit, plus confusion about the increase in the state pension age have led to fewer people claiming the benefit.
“There is a persistent problem that many of those who retired and find themselves struggling for income are not claiming the state support they are entitled to,” said Stephen Lowe, group communications director at Just Group, the insurer, adding that “take-up rates have not improved in recent years”.
“We like to think that state benefits reach those who need them most, but this is clearly not the case with pension credit. This is the third annual decline in the number of claimants and marks a drop from almost 2m since 2016.”
Pension credits are made up of the guarantee credit and the savings credit. The guarantee credit tops up the weekly income of pensioners when it falls below £167.25 for single people and £255.25 for couples. Savings credit is an additional payment for people in retirement who have saved some money towards their retirement.
However, the complexity of the benefits system has led to confusion over eligibility.
The new state pension, which is currently £168.60 a week, is above the threshold that enables retirees to receive guaranteed pension credit. As a result of this, only those receiving less than the full amount of new state pension (due to a lack of sufficient qualifying years) can claim the guaranteed element of pension credit.
Retirees who reached state pension age before the roll out of the new state pension can still apply for the “top up” even if they receive the full amount of basic state pension, but find that their total income is below the guaranteed pension credit threshold.
However, retirees who reached state pension age on or after April 6 2016 are no longer eligible to receive the savings credit component of pension credit.
Last week, the DWP launched a campaign to encourage members of the public to check whether they are entitled to receive the benefit by using an online calculator to find out if they are eligible.
Guy Opperman, minister for pensions and financial inclusion, said: “We’re keen to get the message out there that everyone should claim the benefits they’re entitled to and I would encourage anyone that thinks they might benefit from pension credit to check.”
According to research from Just Group, two-thirds of homeowner retirees failed to claim full benefit entitlements in 2019.
“Our survey once again shows that meaningful sums of money that would make a huge difference to people’s lives are not being claimed,” said Mr Lowe.
“The low level of take-up for some of the key benefits raises serious questions about the support being given to help people navigate the complexities of the benefits system,” he added.
