Pension credit is a vital benefit, designed to help support financially poorer older individuals in the UK. Although the pension credit is such an important benefit, many pensioners are not yet claiming this benefit. The DWP states that around 760,000 families were not receiving their pension credit entitlement in 2023 and had therefore left an estimated £1.5 billion unclaimed.
This unclaimed benefit affects the direct funds of the pensioners and also denies them extra support benefits such as free TV licenses, council tax benefits, and more recently restricted winter fuel payments.
Importance of Pension Credit
Pension credit does more than just top up incomes; it opens doors to other necessary benefits, which are:
- Free TV Licences: For those over 75, saving households £159 a year.
- Council Tax Reductions: Substantially reduce a regular household expense.
- Winter Fuel Payments: Now only for pension credit recipients and other means-tested benefit claimants.
For many, pension credit can be the difference between struggling to pay for living costs and having a more secure retirement.
Trends in Pension Credit Claims
Recent statistics reveal that slightly better pension credit claimants are picking it up:
| Year | Eligible Families Not Claiming | Unclaimed Amount |
|---|---|---|
| 2022 | 870,000 | £2 billion |
| 2023 | 760,000 | £1.5 billion |
Whereas the number of unclaimed cases has declined, significant gaps remain. In 2023, 65% of qualifying pensioners claimed pension credit, compared with a slight increase to 63% in 2022.
Winter Fuel Payments
It brought about a fundamental policy change as of July 2023 to link winter fuel payments directly with means-tested benefits, such as pension credit.
Key Changes:
- Winter fuel payments were previously universal, which used to benefit 11.4 million pensioners.
- Now, only 1.5 million pensioners primarily receiving pension credit qualify.
- This change will save billions of dollars while delivering relief to those with the greatest need.
More stringent eligibility rules have triggered a surge in applications for pension credits as pensioners seek to retain access to winter fuel payments amid rising energy costs.
Barriers to Pension Credit Uptake
Most pensioners are not aware that they qualify for pension credit, especially those who earn modest pensions or savings income, which may not be enough to bring them over the threshold.
Complex Application Process
The application process, being mostly online-based, is cumbersome for older adults who are not familiar with digital platforms.
Stigma of Benefits
Social stigma of claiming benefits scares some people, even when they badly need the help.
COVID-19 Impact
The pandemic disrupted outreach efforts, further dampening progress in raising awareness about pension credit eligibility.
Addressing the Issue
The way forward would be to bridge this gap with proactive measures such as:
- Awareness Campaigns: Public information initiatives should bring home the eligibility criteria and more importantly, the wider benefits of pension credit.
- Streamlined Application Processes: Online applications could be supported by telephone or face-to-face services for older people.
- Collaboration with Charities: Organisations like Age UK could help better outreach among vulnerable pensioners.
- Community Outreach: Local councils and social services can then reach out proactively to interact with pensioners in order for them to access support.
Financial and Social Impacts
Failure to claim pension credit has far-reaching implications for both pensioners and the society;
Financial Effects
- The loss of supplement income leaves the pensioners susceptible to inflation and increasing cost of living.
- Greater benefit access remains unutilized such as council tax benefit
Social Impacts
- Older people are more prone to isolation and stress when unable to afford essential items.
- Pension credit safety net can help to reduce poverty and inequality, thereby contributing to improved general well-being.
Future Considerations
There have been improvements, but the sizeable number of unclaimed pension credit cases signifies that this needs to be maintained. Given that living costs continue to go up and the change in policy which has further limited benefits, such as winter fuel payments, making sure all pensioners take their entitlement is crucial at this time.
FAQ’s
What is pension credit?
UK government benefit giving some money to a poor pensioner.
How does pension credit affect other benefits?
It opens access for free TV license, council tax relief, etc.
Why don’t all pensioners claim pension credit?
Many are unaware of eligibility or the process is too cumbersome.