Mass means-testing has failed pensioners
A new approach to encourage poorer pensioners to claim Pension Credit using automatic payments has had little impact, DWP research reveals.
A new approach to encourage poorer pensioners to claim Pension Credit using automatic payments has had little impact, DWP research reveals today.
Paying people Pension Credit automatically only increased take-up by 8.6 per cent.
In an effort to get more people to claim this support, the DWP used the customer information it holds to best determine who might be eligible for Pension Credit and trialled paying the benefit automatically for 12 weeks to those individuals.
Minister for Pensions Steve Webb said:
We are doing all we can to ensure poorer pensioners get the help they are entitled to, but clearly the current system is not working.
Despite our best efforts, mass means-testing has failed pensioners. Pension Credit is not getting to over a million people who are entitled to it, despite millions spent by successive governments to encourage take up.
The goal is for people to retire on a decent income, which is why we will introduce a flat-rate single tier state pension for future pensioners in the next Parliament, set above the level of the basic means test. This will lift more pensioners out of means-testing and ensure they have a decent and secure income in retirement.
I would encourage all pensioners who think they might be eligible for Pension Credit to give us call to find out.
The research showed that, on the whole, people appreciated being told about entitlements they may not have known about, but most did not then go on to make a claim.
Even following automatic payment, people continued to think they would not be eligible, had a negative attitude towards the claims process, or felt they did not need the additional income.
Others misunderstood aspects of the study, or were confused about the income and savings thresholds, or had health issues or simply forgot.
Entitlement to Pension Credit depends on a wide range of personal circumstances including income, capital, whether a person has certain disabilities or caring responsibilities and housing costs.
Measures the DWP has undertaken to encourage Pension Credit take-up include introducing telephone claims without the need for a signed claim form, working closely with local organisations, and a digital toolkit resource to help those who work with older people identify who might be eligible and explain the application process.
Notes for Editors:
- ‘Quantitative Evaluation of the Pension Credit Payment Study’ and ‘Qualitative evaluation of the Pension Credit Payment Study’ are available at: http://research.dwp.gov.uk/asd/asd5/rports2011-2012/rrep796.pdf http://research.dwp.gov.uk/asd/asd5/rports2011-2012/rrep795.pdf
- The study ran from 15 November 2010 to 18 March 2011.
- A random sample of 2,000 people who were considered eligible for Pension Credit but do not get it were paid their estimated entitlement without having to make a claim first. They received Pension Credit payments automatically for 12 weeks and were then invited to make a claim.
- A further 2,000 people who were considered eligible for Pension Credit but do not get it were referred for a visit by DWP staff who explained about the benefit and helped them make a claim. Not everyone would have received a visit, for example if we were unable to contact them, they were unavailable, or had recently claimed.
- Pension Credit, introduced in 2003, is a means-tested benefit for older people on a low income which tops up their weekly income to £137.35 a week (£209.79 for couples). Around 3.3 million people get Pension Credit.
- To claim Pension Credit as well as Housing Benefit and Council Tax benefit in one free phone call 0800 99 1234.
- In 2009/10 there were 1.8 million pensioners (16%) living in relative poverty (measured as below 60 per cent of contemporary median income after housing costs).