AJ Bell press comment – 29 November 2022
- Almost 60,000 pension credit claims made between April and August this year had yet to be processed by 26 October, figures obtained through Freedom of Information requests reveal
- Some 111,550 pension credit claims were made between April and August, according to the DWP
- 37,438 of these claims were successful, while 15,580 claims were rejected
- This implies around 71% of pension credit claims are successful
- It also means 58,532 of claims made during the period are stuck in a backlog
- If a similar proportion (71%) of these outstanding claims are successful, approaching 80,000 successful pension credit claims will have been made in the first five months of the 2022/23 tax year
- Given 85,500 new pension credit claims are typically received during an entire tax year, this suggests claims have spiked significantly in response to the cost-of-living crisis
- Deadline of 18 December for Government’s cost-of-living support scheme an additional incentive to claim pension credit now, as claims can be backdated by up to three months
Tom Selby, head of retirement policy at AJ Bell, comments:
“The combination of a cost-of-living crisis and a DWP awareness campaign appears to have dramatically increased the number of pension credit claims made by retirees on low incomes. However, a huge backlog risks undermining efforts to boost take-up of this valuable benefit.
“According to DWP figures, 111,550 pension credit claims were made between April and August 2022. However, as of 26 October, fewer than half of these claims had actually been processed.
“In response to an FOI request, the DWP itself acknowledges that there is ‘currently a backlog of pension credit claims that still require a decision to be made’.
“It is vital the DWP gets its house in order and processes these outstanding claims as soon as possible. It would be criminal if a campaign designed to boost take-up of pension credit was successful, only for this success to be undermined because the Government had failed to build sufficient capacity to deal with this extra demand.”
Still huge numbers failing to claim
“Even with the apparent jump in numbers of people claiming pension credit this year, there remains a huge shortfall, with the DWP estimating 850,000 eligible pensioners fail to make a claim, missing out on an estimated £1.7 billion. That is around ten times the average number of successful pension credit applications made each year.
“The DWP itself says eligible pensioners not receiving pension credit could be missing out on £3,500 a year. This would be vital at any time, but particularly with many households facing huge rises in food and energy bills over the winter.”
Pension credit explained
Pension credit is a key benefit provided by the state which often tends to go unclaimed by lower income retirees.
In 2022/23, if you are over state pension age (66), single and your income is less than £182.60 a week then pension credit will top you up to that amount. For a couple, the combined income figure is £287.70.
In relation to pension credit, your income includes your state pension, other pensions, employment or self-employment earnings and most social security benefits. As with the state pension, it is up to you to claim pension credit.
The Government’s cost-of-living support scheme should act as a further incentive to those still yet to claim pension credit. A successful application made by 18 December 2022 could qualify someone for a £324 cost of living payment. This is because pension credit claims can be backdated for up to three months, provided the relevant entitlement conditions are met during that period.
