Thousands Missing Out on Pension Credit, a Benefit that Could Save Them from Poverty

Strategic Insights -

The Work and Pensions Committee has highlighted a significant problem in the UK, where thousands of people are missing out on Pension Credit, a benefit that could help them avoid living in poverty in old age. The report, which has been described as a "scandal" by an MP, emphasizes the need for a national strategy to combat pensioner poverty and ensure that everyone has access to a minimum retirement income.

Key Takeaways:

  • The number of people of pension age living in relative poverty below 60% of median income is 1.9 million or 16% of pensioners.
  • Between 2008/09 and 2022/23, the number of pensioners in households below the Minimum Income Standard (MIS) rose from 1.5 to 2.8 million.
  • The proportion of pensioners below 75% of MIS, where the risk of material deprivation increases substantially, rose from 5.9% in 2021/22 to 9.5% in 2022/23.
  • The UK Government has been urged to establish a national strategy to combat pensioner poverty, which would include a minimum retirement income level and a plan to increase Pension Credit take-up.
  • The report highlights the importance of increasing Pension Credit take-up, particularly for those who narrowly miss out on the benefit due to the "cliff-edge effect" of current regulations.
  • Introducing a taper to Pension Credit could help mitigate this effect and encourage more people to claim the benefit.
  • A successful application for Pension Credit can open doors to additional assistance, such as housing cost support, heating bill contributions, council tax relief, and a free TV licence for those aged over 75.

Statistics:

  • 1.9 million pensioners living in relative poverty below 60% of median income.
  • 1.7 million pensioners in households below the Minimum Income Standard (MIS), a 14% increase since 2008/09.
  • 13.5% of pensioners below 75% of MIS in 2022/23, an increase of 44.6% since 2008/09.
  • 700,000 households eligible for Pension Credit but not claiming the benefit.
  • £4,300 average annual value of Pension Credit.

Sources:

  • "Work and Pensions Committee"
  • "Independent Age"
  • "Work and Pensions Committee's Pensioner Poverty Report"
  • "Daily Record"
  • "GOV.UK"
  • "The UK Government's review into raising the State Pension age, set to conclude in March 2029"