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Poor take-up of Pension Credit costs the UK twice what it saves, claims report

12:00am | & News

A failure to deliver Pension Credit to more than a million older people who are entitled to it is costing the UK’s health and social care systems an estimated £4 billion per year, says older people’s charity Independent Age.

Pension Credit – a benefit designed to keep the least well-off pensioners out of poverty – is currently being received by just 61% of those who should be receiving it, leaving many on a threadbare income and having to choose between heating and eating.

New research commissioned and published by Independent Age, has found that the low take-up is actually costing the taxpayer almost twice what it would if everyone entitled to Pension Credit received the benefit. That’s because it creates significant knock-on effects for the NHS and social care, which are needed more by the poorest pensioners.

According to the researchers’ report, if everyone entitled to Pension Credit was receiving it, the extra cost to the taxpayer would be £2.2 billion per year. But with the take-up rate at just 61%, the knock-on cost to the UK’s healthcare and social services stands at around £4 billion per year.

The report’s authors are Professor Donald Hirsch and Dr Juliet Stone, from the Centre for Research in Social Policy at Loughborough University. They found that the NHS bears the brunt of the additional demand, with pensioners on low incomes likely to need more healthcare and services, such as prescriptions or the use of a hospital bed. The resulting costs to healthcare systems are estimated to be between £3.02 billion and £4.81 billion per year.

Those missing out on the Pension Credit they’re entitled to are also more likely to need social care – whether residential or home-based – which incurs additional costs to the state of between £66 million and £189 million per year.

The report concludes that if Pension Credit take-up was lifted from 61% to 100%, then almost 450,000 pensioners could be lifted out of poverty, reducing pensioner poverty to its lowest ever level and resulting in substantial savings to the NHS and social care systems over the long term.

Independent Age is calling for the Government to put in place an ambitious, publicly available action plan detailing how it will work to increase the uptake of Pension Credit over the next five years. The charity’s Chief Executive, Deborah Alsina MBE, said the report provided a new incentive for the Government to take urgent action on improving the woefully low take-up of Pension Credit.

“What we can see from this report is that ensuring the poorest pensioners have a liveable income is not only the right thing to do, it’s the economically responsible thing to do,” she said.

“Taxpayers are unnecessarily footing a health and social care bill of an estimated £4 billion, when if the Government ensured older people received the £2.2 billion to which they’re entitled, many of these additional costs to our health and care systems would be alleviated. Reducing pressure on our hospitals and care services is especially critical right now, as we continue to cope with the effects of COVID-19.

“A take-up rate of 61% for a benefit designed to keep older people out of poverty is indefensible – and this rate has stayed stagnant for a decade. Without this money, many people are prevented from living with dignity and having a social, well-connected later life.

“The Government needs to urgently create an action plan that contains high quality, up-to-date research into who is not claiming Pension Credit and why they are not receiving it. There needs to be recognition of the active role the Government must to play to increase Pension Credit take-up.”

Pension Credit recipient Bert Pearson (94) said that without the benefit he would struggle to pay for basic essentials like heating and food: “They rarely tell you what you’re eligible for – it’s up to you to go and find out for yourself,” he said.

“For me, it’s opened up the door to other things, like the winter fuel payment. If I had any less than I did now, I’d be struggling to get by. It would make an awful difference. Many people don’t realise that when you’re on an income like mine, you have set out pound for pound where it’s going to go. Quite frankly, when you’ve done that, there’s nothing left.”

• You can read the Independent Age report on Pension Credit in full by clicking here. You can also find out more about Pension Credit – including whether you’re entitled to it and how to claim – by clicking here.

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