£2bn pensions credit still unclaimed

The government has insisted it is committed to increasing the take-up of the pensions credit after new figures show up to £2 billion still remains unclaimed.

Figures from the Department for Work and Pensions (DWP) show the take-up of the credit has slowed down, and has admitted it is likely to miss its target of getting three million people claiming by March this year.

At the last count, 2.57 million were claiming £5,460 billion of pensions credit, about two thirds of the 3.75 million eligible for the benefit. This is compared to a target of 73 per cent set in 2003.

Charity Help the Aged warned the figures showed the pensions credit was not helping the most vulnerable people, and called for the unclaimed money to be ring-fenced for older people.

“These figures show in the starkest possible terms that Gordon Brown’s flagship policy on pensioner poverty is failing to help many of the most vulnerable older people,” said spokeswoman Anna Pearson.

“Take-up has slowed almost to a crawl with an incredible £2 billion a year left unclaimed, which is equivalent to a tax windfall to Treasury coffers of £5.5 million each and every day.”

She added: “Almost two million older people struggle on the breadline in a life of poverty, but still government ministers trumpet a benefit scheme which simply isn’t getting help to those who need it most.”

Liberal Democrat work and pensions spokesman David Laws said the failure to meet a “key target in the war against poverty” showed that means-testing – which lies at the heart of the tax credit system – was simply not working.

“Take-up of pension credit is not picking up, but grinding to a halt.Means-testing is simply unsustainable. The government must accept that fundamental reform of the pension system is needed,” he said.

“Ministers must bring forward proposals in the forthcoming white paper which put an end to a system that is leaving thousands of pensioners in unnecessary poverty.”

However, pensions minister James Purnell insisted the government had a “proud” record on tackling poverty among the over-65s, saying that initiatives such as the pension credit had lifted more than two million pensioners out of poverty.

“In 1997 pensioners faced having to live on £69 a week. Pension credit allows every pensioner an income of at least £114.05 a week. Today, pensioners are no more likely to be poor than any other group in society,” he said.

That said, Mr Purnell insisted the government was “committed to reaching those people who are entitled but not claiming” and said the forthcoming white paper on pensions would include proposals to improve the situation.