Pension loan applications fall again, prompting calls for a new registration drive

The number of people claiming pension credits has fallen for the second year running despite awareness campaigns and targeted registration trials, new official figures show.

An estimated two-thirds of eligible poor pensioners claim the benefit, which tops up weekly income to a minimum of £218.15 for single people and £332.95 for couples.

The news of the uptake follows the Government’s announcement that the Winter Fuel Payment will be limited to those claiming pension credit or certain other benefits.

The pending change has prompted calls for a new pension credit registration drive before winter.

Tom Selby of AJ Bell said: “Failure to do so would risk leaving vulnerable pensioners in dire financial straits when the cold weather hits.”

Another, Jon Greer of Quilter, says: “Linking winter fuel payments to a benefit that appears to have only a 60 per cent take-up has caused considerable consternation.”

> How to claim pension credit: Find out below

Around ten million pensioners could lose their Winter Fuel Payments, worth between £100 and £300 a year, and between one and two million of the poorest are estimated to struggle to pay energy bills to heat their homes this winter.

This includes approximately 850,000 seniors who are eligible for pension credit but do not apply for it.

The Scottish Government has just confirmed it has “no choice” but to also test its version of the Winter Fuel Payment, due to a £160m funding cut linked to the UK Government’s decision.

A Age UK petition calling on the Government to reconsider its plans The petition to scrap payments for most pensioners has gathered more than 380,000 signatures.

Ros Altmann, a former pensions minister who now sits in the House of Lords, is calling for the decision to be delayed to give pensioners time to prepare and for more careful consideration of the impact.

It suggests three ways payments could be taxed rather than withdrawn for most pensioners, to address the need for cost savings while still protecting the poorest recipients.

New figures from the Department for Work and Pensions show that in February this year there were 1.4 million people receiving pension credit, or 1.5 million including their partners.

This is 11,000 fewer than the previous year and 24,000 fewer than in 2022. Around two-thirds of the beneficiaries are women.

The DWP says there has been a long-term downward trend in the number of pension credit cases due to the rise in the state pension age and the introduction of the new state pension.

Pension credit is set at a few pounds less per week than the full state pension, which is currently £221.20 per week for people retiring since the flat-rate system was introduced in April 2016.

The main rate of state pension could rise to £231 a week, representing a rise of £500 to £12,000 a year next spring under the triple lock.

However, if you are older and not in a comfortable financial situation, supplementing your income with a pension loan opens the door to a lot of other help for household expenses.

You can earn thousands of pounds on top, including help with housing, heating, council tax and TV licence costs – and now Winter Fuel Payments too.

The previous government ran a series of awareness campaigns to encourage more people to apply for pension credit. And last summer, it launched a trial in which “invitation to apply” letters were sent to older people living in households receiving housing benefit.

It is “absolutely vital” to step up the campaign to increase the take-up of pension credit

The latest “stagnant” pension credit figures highlight the significant challenge facing the Government in increasing take-up before universal winter fuel payments are scrapped, says AJ Bell public policy director Tom Selby.

‘Given that the winter fuel bill is £300 a year, this will represent a significant hit to the incomes of millions of pensioners.

‘The fact that the number of people claiming pension credits has been gradually declining over the past two years presents a worrying picture for pensioners who most need government support but may not be aware that they need to apply for it.

‘It is therefore absolutely vital that the Government steps up communications on pension credit to drive increased take-up. Failure to do so would risk leaving vulnerable pensioners in dire financial straits when the cold weather hits.

‘The Chancellor has also outlined plans to merge pension credit and housing benefit in order to drive greater take-up, but the benefits system is incredibly complex so this may not be a simple solution.’

Failing to check whether you can claim pension credit could be ‘incredibly costly’

“Pension credit has become even more important following the Labour Government’s changes to winter fuel payments,” says Jon Greer, director of retirement policy at Quilter.

“It is an incredibly important benefit aimed at the country’s poorest retirees.”

He added: “Linking winter fuel payments to a benefit that appears to have only 60 per cent take-up has caused considerable consternation.

‘At present, despite numerous awareness campaigns carried out in the media and by the Government, there are many retirees who are unable to claim pension credits despite being eligible.

‘This is most often due to a lack of knowledge or an assumption that they won’t be eligible, but failing to check could be incredibly costly as you could not only be missing out on a substantial boost to your retirement income but also paying for winter fuel.’

We expect a quick action plan for the acceptance of the pension credit

“Up to 1.2 million older people living on low incomes could be missing out on this opportunity,” says Joanna Elson, chief executive of the charity Independent Age.

‘The low take-up figures show that now is not the right time to make changes to the Winter Fuel Payment. It is dangerous and puts older people’s lives at risk.

‘Starting to assess the means for the Winter Fuel Payment this autumn does not give the UK Government sufficient time to significantly increase take-up of the pension credit.’

She adds: ‘Our helpline Fearful older people are frequently heard cutting back and seeking help, and in the days since the Winter Fuel Payment was announced there has been a surge in calls regarding pension credit and other entitlements.

“We hope that the new UK Government will take swift action to introduce an action plan for the uptake of pension credits. Innovative and impactful efforts are needed to address this problem and get this money directly to older people living in poverty.”