Pension Poverty - Quids in

Latest figures show that 1.9 million pensioners are living in poverty, largely because they are not claiming benefits. Nearly a million pensioner households are entitled to, but not receiving, Pension Credit and 200,000 households are missing out on Housing Benefit. Each year £2.2 billion of these two benefits goes unclaimed.

There are a number of reasons why people aged over 65 are not claiming benefits. These include lack of awareness, concerns that the process will be too complicated, negative attitudes towards claiming state support and secrecy around personal financial information.

By not claiming these benefits pensioners are putting their health at risk. A report by Joseph Rowntree Foundation (JRF) highlights the role of poverty premiums. For example, many people on low incomes use pre-payment meters for gas and electricity, at greater cost, and are less likely to switch their energy supplier to get a better deal. This particularly applies to older people, which is why there are schemes in place such as the winter fuel payment, warm home discount and cold weather payment. However, like with Pension Credit, people need to know about it – and how to apply.

Poverty in later life is having a direct impact on the NHS and social care systems, which are collectively picking up an annual bill of about £5 billion. Food poverty is also on the rise among older people. Citizens Advice Coventry reported an increase in food vouchers given out to over 50s and 60s (from 26 per cent to 31 per cent and from 6 per cent to 9 per cent respectively). And since the coronavirus this has become even greater.

Andrew Forsey, National Director of Feeding Britain, told us: “Pensioners’ access to food is dependent on a number of factors – household income, the availability of food shops in their area, and support from friends or relatives, to name just three.

“What the pandemic has done is put that access at risk for many more people, by compounding low income and isolation. Among those seeking help, often for the first time, are pensioners who may be eligible for Pension Credit but are not registered to receive it.”

What difference would benefits make?

Pension Credit tops up low income and can be claimed by a single person or a couple. It works out on average at around £32 a week, or £1,664 a year*. Currently 2 in 5 (almost 40 per cent) households entitled to Pension Credit are not receiving it. Meanwhile around 1 in 7 households entitled to Housing Benefit (which helps with rent) are not claiming it. On average this is £62 a week (or £3224 a year). It’s a substantial amount of money and could make a big difference. [*Latest stats published by DWP in October 2020, are based on 2018-19 figures]

Are some less likely to claim than others?

It is commonly thought that older pensioners (75 +) may be less likely to claim benefits than younger pensioners. However figures show there is little difference in take-up rates between age band. What they do show is that couples are less likely to claim than single people, and of single people, women are missing out more than men.

This is largely because on average women’s incomes are lower than men’s. Gender pension inequality is a growing issue right now. Figures from the Pension Policy Institute show 1.2 million women in their 50’s have no private pension – this is 50 per cent higher than men.

Gender could also play a role in why benefit take up is lower in couples. For example, it is quite common, especially in older couples, for a woman to be unaware of how much her husband has saved in his pension – thus assuming they don’t qualify for extra support. With men generally in control of the household finances it can often be a discussion that goes unspoken. The Institute blames pension communications which are stuck in a “male-oriented language and culture”.

When it comes to Housing Benefit, those who rent privately are less likely to claim benefits than social housing tenants. A third of private renters are missing out compared to twelve per cent of social tenants. And the amounts are higher – private renters are entitled to £63 a week, compared to £56 for social housing.

Other barriers to claiming state support

Age UK has published a report into the reasons why billions of pounds worth of benefits go unclaimed each year. Based on results from a DWP survey, the primary reason is people assuming they won’t be entitled to extra help – cited by 65 per cent of respondents. Of these, three-fifths (62 per cent) said they did not like asking for benefits and a similar proportion (58 per cent) said the process of applying would be too long or complicated. Overall, ten per cent of respondents said they could manage without.

Another reason is that if somebody receives a State Pension, and sometimes other support such as Attendance Allowance, they assume that if they were due anything else they would have received it automatically. The survey found that only a small amount (4 per cent) said they hadn’t heard of Pension Credit which shows that awareness is high but knowledge is low.

Case study:

Pension Credit recipient Bert Pearson, 94, said 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,” Mr Pearson 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.”

[Source: Independent Age]

There can be some life-changing triggers that prompt people to claim such as a considerable drop in income, such as a bereavement or health problems causing extra financial strain. But on the whole encouragement from trusted professionals such as health and care staff is the most effective route to take-up, or a referral to a service that carries out a benefits check.

What work needs to be done?

In February 2020 DWP ran a 12 week campaign to raise awareness of Pension Credit. Adverts and posters were displayed in GP surgeries and post offices encouraging people to check their eligibility. While there is no evidence available to show whether the campaign was a success, Age UK wants to see the Government do more, firstly by making the system easier for people to navigate.

“If Pension Credit take-up were to rise from its most recently recorded rates, to 100%, this would lift 270,000 more pensioners free from poverty. The introduction of an automatic registration scheme would immediately enhance so many people’s ability to afford the food they need.” Andrew Forsey, Feeding Britain

In an ideal world an automated system would be the obvious solution. But unfortunately this would only work if the benefits system was drastically simplified, therefore making it less targeted to individuals. This could mean older people who are also carers or disabled would miss out on extra support. Without the government knowing all of somebody’s personal and financial information it’s impossible to calculate what they are entitled to.

Another approach suggested by Age UK is to make different benefits more joined up. So, if someone claimed Pension Credit, they could claim Housing Benefit and Council Tax Benefit at the same time. Plans to replace Housing Benefit by combining it within Pension Credit, have been delayed by the slow roll out of Universal Credit. The change is not scheduled to happen until at least 2023. Closer data sharing between the DWP and local authorities would mean that if an older person claimed one of these benefits, they would automatically be assessed for the other two.

There’s also an argument for early-on prevention. Poverty in later life is only going to get worse; more and more of us are living longer and a larger number are self-employed. Making sure working age people are financially protected for the future should be top of the agenda. JRF stresses the importance of continuing auto-enrolment by employers, reducing the earnings limit so that more low earners can be included in pension schemes and creating separate savings schemes for self-employed people.

Tackling the here and now

Getting the messages right is key but so is getting the information out to where people are. The matter was discussed in the House of Commons earlier this week, where it was announced that the Department for Work and Pensions (DWP) is considering “an internal review of communications products to identify further improvements in our messaging, with many more aspects to be pursued this year.”

Age UK says that the way people respond to messages is vital – a telephone call or face-to-face support is likely to be more effective than, for example, an advert. Health professionals and support services play an important role in this as they have direct contact with older people.

As well as identifying people in need they can make referrals to local advice organisations who can help people navigate the system and complete any lengthy forms. In order for these services to work effectively in Covid-19, there needs to be sufficient funding and resources from the Government.

Being the change we want to see

In January Clean Slate, which runs the Quids in! money skills initiative, won contracts with DWP to extend its money health-check service across nine London boroughs and the whole of Wales. We’re working hard to recruit bigger teams to deliver remote money and benefits support to those in need. Managing Director Jeff Mitchell said: “It’s good to be working with the DWP to help claimants who are struggling and there’s more we can do together to include older people too. There’s a recognition that too many people are struggling financially and it’s taking many people to crisis point. It’s making a real difference already.”

The growing problem around Pension Credit is proof that organisations in our sector play a vital role in the fight against poverty. We have all long been campaigning for more ‘joined-up’ processes and greater data sharing – it’s only by using this approach that it’s possible to reach out to the most vulnerable. And as the pandemic rages on, the time to act is now.

This news article was taken from the 'Quids in! Pro', which can be viewed here.