Eight in 10 pensioner homeowners failed to claim any of the benefits they were eligible to receive last year, such as Pension Credit, according to new research.
The retirement specialist Just Group found that many retirees who own their own home and qualify for Pension Credit do not apply for the benefit.
They missed out on an average of £1,807 extra annual income. Pensioners failed to claim the council tax reduction as well as Pension Credit.
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The figures are all the more shocking because Pension Credit applications did rise last year as retirees rushed to claim in a bid to secure the Winter Fuel Payment on top.
Stephen Lowe, group communications director at Just Group, said: “Despite the focus on benefits as a result of the government’s decision to axe Winter Fuel Payments to millions, our survey shows the scandalous scale of the underclaiming problem."
Pension Credit is worth £3,900 a year on average, and unlocks access to other benefits like help with NHS costs, a free TV licence and Winter Fuel Payment.
Pension Credit applications rocketed by 145% after chancellor Rachel Reeves announced last summer that the Winter Fuel Payment, previously a universal benefit to all pensioners, would be means-tested.
Pension Credit tops up a retiree's income, and can be claimed even if you have a pension or own your own home.
It is one of the most underclaimed and misunderstood benefits. About two-thirds of people (65%) entitled to Pension Credit received the benefit in 2022-2023, according to the latest government data. This means up to 760,000 households that are eligible for the support aren't claiming it. In total, £1.5 billion went unclaimed.
We explain everything you need to know about Pension Credit, and the various ways to apply.
What is Pension Credit?
Pension Credit averages £3,900 a year, but could be worth much more to certain households. It also unlocks access to other benefits, such as cold weather payments, help with NHS costs, the £150 Warm Home Discount Scheme - and from last year, the Winter Fuel Payment.
The Winter Fuel Payment was previously available to everyone of state pension age living in the UK.
Anyone who is unsure whether they or a loved one is entitled to Pension Credit can check using the government's online Pension Credit calculator.
It is separate from the state pension, and paid to people of state pension age on low incomes, even if they have savings, a personal or workplace pension, or own their own home.
The benefit is made up of two parts: guarantee credit and savings credit. The former tops up your pension income to a certain level, and is available to those on low incomes. The latter is only available to those who reached state pension age before 6 April 2016 and had some money saved for retirement, for example in a personal or workplace pension.
Caroline Abrahams, charity director at Age UK, comments: “Claiming Pension Credit is the main pensioner benefit that also qualifies people for a Winter Fuel Payment, so we really do urge anyone who is feeling the pinch to come forward and check if they’re eligible for extra help."
Even if Pension Credit will only provide a small amount of money to you, it’s worth claiming as it means you will qualify for other benefits:
- Winter Fuel Payment
- Support for mortgage interest (SMI) if you own the property you live in
- Housing benefit if you rent the property you live in
- Council tax reduction
- A free TV licence if you’re aged 75 or over
- Help with NHS dental treatment, glasses and transport costs for hospital appointments
- Cold weather payments
- £150 Warm Home Discount (only for those who get the guarantee element of Pension Credit, or are on a low income and have high energy costs)
- Christmas bonus (only for those who receive the guarantee element of Pension Credit)
- A discount on Royal Mail redirection service for those moving home
When is the deadline to apply for Pension Credit and receive the Winter Fuel Payment?
Many pensioners will be worried about losing their Winter Fuel Payment, given that average energy bills rose by 10% in October. The energy price cap increased by a further 1% on 1 January.
It's worth checking if you qualify for Pension Credit, because if you do successfully apply, you will receive the Winter Fuel Payment automatically in future.
However, you will not receive it for this winter. The deadline to apply for Pension Credit and receive Winter Fuel Payment was 22 September last year. For those applying after this date, the Department for Work and Pensions (DWP) could backdate your claim as long as you applied by 21 December.
Why have so many people failed to claim Pension Credit in the past?
Pension Credit is one of the most underclaimed government benefits, with a complex eligibility criteria. Some pensioners assume that if they own their own home they won't qualify - but this is incorrect, as they may be entitled to claim it. If they have savings or a pension, they may also qualify for Pension Credit.
Even those who do claim it may not be receiving as much money as they should. Some pensioners who receive Pension Credit may be missing out on extra money, due to not updating their financial information with the DWP. For example, if their savings reduce they could be entitled to a higher amount of Pension Credit.
Figures released last year revealed that the DWP could be paying out an extra £80 million if it had up-to-date information about claimants. Lowe at Just Group, says: “Benefits like Pension Credit are a valuable financial resource for retirees on low incomes or for those who are disabled, are carers, or have dependents.
“So, to see that eligible pensioners missed out on £80 million of extra income in 2023-2024 due to submitting inaccurate information is deeply frustrating. The money is there to support the people who need it most, and although the application process can be lengthy, we strongly encourage people to persevere.”
Governments have run multiple awareness campaigns to encourage more people to claim the benefit. Reeves's shock Winter Fuel Payment announcement last July also drove up claims. For example, in November, the DWP received about 10,000 applications each week. This compares to about 4,000 back in April (before the announcement).
However, Abrahams at Age UK points out that despite numerous campaigns to drive the take-up of Pension Credit over the years, only 65% claim it "and the figure has never gone above 66% in the last decade".
She adds: “We would encourage anyone with an older person in their lives to strike up a conversation about the cost of bills and mention this extra help that might help them to cope, if they put in a claim.”
How much is Pension Credit worth?
Pension Credit rose 8.5% in April 2024, thanks to the state pension triple lock. Pension Credit tops up a pensioner’s weekly income to £218.15 if they are single (or £11,344 a year) in the current tax year. For those with a partner, the joint weekly income is topped up to £332.95 per couple (£17,313 a year).
It will rise a further 4.1% this April.
But you may be entitled to extra amounts if you have other responsibilities and costs. For those with a severe disability, a further £81.50 a week is available. You must get one of the following benefits to qualify:
- Attendance allowance
- The middle or highest rate from the care component of disability living allowance
- The daily living component of personal independence payment (PIP)
- Armed forces independence payment
- Daily living component of Adult Disability Payment (ADP) at the standard or enhanced rate
If you care for another adult, you could receive an extra £45.60 a week, provided you get carer’s allowance (or you’ve claimed carer’s allowance but are not being paid because you receive another benefit that pays a higher amount). If you and your partner have both claimed or are currently receiving the carer’s allowance, you can both receive this extra amount.
For those responsible for a child or young person, you could get a further £66.29 a week (which increases to £76.79 a week for the first child if they were born before 6 April 2017). The child or young person must normally live with you and be aged 19 or younger. If the child or young person is disabled, you may get another payment.
The final top-up helps with housing costs. An extra payment may be made to cover ground rent if your home is leasehold, or to cover service charges. The above payments are all known as "guarantee credit", and form one element of Pension Credit.
The other part of Pension Credit is savings credit, which is worth up to £17.01 a week if you’re single, or up to £19.04 if you have a partner.
Who is eligible for Pension Credit?
You must live in England, Scotland or Wales and have reached state pension age (currently 66) to be eligible for Pension Credit. When applying for guarantee credit, your income is calculated; if you have a partner, your joint income will be calculated.
The DWP defines income as your state pension and other pensions (even if they’ve been deferred), earnings from a job or self-employment, and most benefits.
However, not all benefits are counted as income. Attendance allowance, child benefit, disability living allowance, personal independence payment, housing benefit, council tax reduction and the Christmas bonus are excluded.
Your savings and investments are also taken into account, which includes shares and any property you own (apart from the home you live in). If you have £10,000 or less, this will not affect your eligibility for Pension Credit.
If you have more than £10,000, every £500 over £10,000 will count as £1 income a week. So, if you have £11,000 in savings and shares, this counts as £2 income a week. If your income is below £218.15 a week then guarantee credit will top you up to that amount. If you’re claiming as a couple and your weekly income is below £332.95, it will be topped up to that level.
The criteria to claim savings credit is different. You can only access it if you reached state pension age before 6 April 2016, and you have some savings and/or a private pension. There isn’t a savings limit; however, if you have over £10,000 in savings, this will affect how much you receive. You might still get some savings credit even if you do not get the guarantee credit part of Pension Credit.
The eligibility criteria are complicated, and is likely to be one of the reasons why many pensioners don’t bother claiming.
You can use the government’s Pension Credit calculator to work out if you can claim and how much you’ll get. You’ll need to have details of your earnings, benefits, pensions, savings and investments. If you get stuck, call the helpline on 0800 99 1234 (Monday to Friday, 8am to 6pm).
How to claim Pension Credit
You can apply for Pension Credit in several ways. Options include applying online on the government website, phoning the helpline (0800 99 1234), or submitting an application by post. If you haven’t reached state pension age yet, you can still apply up to four months before this date.
You’ll need your National Insurance number when you apply, plus information about your income, savings and investments. If you have a partner, you’ll need the same details about them too.
Government figures show that the majority of people apply for Pension Credit online. In September, about 92% of claims were submitted online.
Tom Selby, director of public policy at the investment platform AJ Bell, comments: "The DWP offers a useful online tool to check if you might qualify for Pension Credit, or you can contact the Pension Credit claim line to discuss your eligibility. Organisations like Citizens Advice and Age UK are also a great source of independent information and help.”
If you apply for Pension Credit and your claim is turned down, you can ask the Pension Service to look at your claim again if you think the decision is wrong. Asking them to change their decision is called a "mandatory reconsideration". It’s free to do and you don’t need to use a solicitor.
Some of the reasons for a claim being refused include having too much income, not being a UK resident, failure to provide all requested information, not claiming on time and not being the right age.
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