How do you claim pension credit? Claims spike as household bills soar

Applications for pension loans have skyrocketed – but so have rejections – as older people try to increase their income to cover growing household bills.

Successful applications rose 75 per cent to 143,000 in the year to last April, while refusals rose 231 per cent to 95,500.

This follows a government awareness campaign to drive acceptance of the payments, unlocking a host of other benefits.

The pension credit tops up weekly earnings up to a minimum of £201.05 for single people and £306.85 for couples.

You can earn thousands of pounds on top, including help with housing costs, heating, council tax, TV licenses and other bills, and receiving pension credit qualifies you for cost-of-living payments from the Treasury.

New data on claims has been obtained through a Freedom of Information request by financial services firm Quilter, which says year-to-date figures for 2023/24 suggest pension credit claims will rise again (see below).

Between April and September this year, some 118,200 applications have been processed, but almost 40 per cent have been unsuccessful, according to figures provided by the Department for Work and Pensions.

Quilter says reasons for a claim to be rejected include having too much income, not being a UK resident, not providing all the information requested, not submitting the claim on time or not being of the right age.

> How to apply for pension credit: see the box below

Claims and denials data for the last five years

DWP data on pension credit, obtained under a freedom of information request by Quilter

You can ask to have the decision reviewed if you think it is wrong, through a process called “mandatory reconsideration.” This is free and does not require a lawyer or other legal help.

Last month, the DWP published figures on the use of pension credits which revealed that around 880,000 or six in 10 families who were eligible for them did not claim them in 2021/22.

Up to £2.1 billion was left unclaimed, or around £2,200 a year for each family that was entitled to pension credit but did not claim it.

The pandemic could have skewed the figures, and the Government has been carrying out an awareness campaign urging older people in difficulty to apply for pension credits.

This tells older people to ignore myths that could deter them from applying, including that having savings, a pension or owning a home are barriers.

It also launched a trial aimed directly at people who might qualify for a pension credit and encouraging them to sign up.

Older people living in households receiving housing benefit in 10 local authorities received “invitation to claim” letters.

However, pensions experts have called on the DWP to do more to directly target people who are likely to be eligible and ask them to apply.

“It is very encouraging to see so many people receiving pension credits, especially at times like these, as any increase in a pensioner’s income can transform their quality of life,” says Jon Greer, director of retirement policy at Quilter. .

‘Unfortunately, many people are unaware of these credits or simply do not realize that they would be eligible to receive them.

‘Despite this increase in the number of compensations, there will still be hundreds of thousands of pensioners who will be able to claim but will not do so.

‘What is clear is that large Government-backed campaigns, such as those carried out in recent years, can have a huge impact on raising awareness, but risk being forgotten over time.

‘A system of automatically awarding benefits based on other data held by the DWP appears to be a simple answer, but in practice it is unrealistic as the data for some benefits is not the same as that used for others.

“That said, existing data could help identify those most likely to be eligible, who could then be targeted more specifically.”

Former Pensions Minister Steve Webb says: ‘There is no doubt that last year there was an increase in interest in pension loans and substantial growth in applications.

‘The fact that there have been over 60,000 additional successful applications is very good news. But this relatively unspecific activity had a drawback: a total of 95,000 people filed unsuccessful claims.

“This will have been frustrating for them and will have slowed down the processing of successful claims.”

Webb, now This is Money’s pensions columnist and partner at LCP, adds: “While there is room for widespread advertising campaigns, a more effective approach would be for the Government to use the data it already has, particularly on pensioners who They have already applied for housing subsidies, to target “like a laser” those who are missing out on pension credit.

“This helps those most in need in a way that is efficient for all concerned.”

> How does the Caregiver premium on pension credit work? Steve Webb explains

Ros Altmann, former pensions minister and now a member of the House of Lords, says: “This is very interesting and it is clear that there has been a big push to try to increase claims for pension credits, which had some impact afterwards. of the pandemic”. , or perhaps it was a result of the pandemic and subsequent inflationary pressures.

‘However, the total numbers of applications granted or rejected each year are substantially lower than the number of applications submitted by the three sources.

“It would be interesting to know how long it takes to review and decide claims in general.”

Lady Altmann continued: “It is very important that any pensioner entitled to pension credit applies, because the additional benefits you will receive, even if you are only entitled to a small amount of the pension credit payments, are potentially worth thousands of dollars. “. of extra pounds.’

A DWP spokesperson says: ‘We want to make sure our support is there for those who need it, and our extensive communications campaign has helped drive pension credit claims to an all-time high.

“In addition, this year we have supported pensioners with the largest state pension increase in history, committed to the triple lock and provided up to £600 to help with heating costs this winter.”