Press Release - Progress in tackling pensioner poverty:
encouraging take-up of entitlements
21 July 2006
The Pension Service has made real and substantial progress since
2002 in helping pensioners to secure their entitlements using new
and well thought through approaches, but will need to build on this
work to improve take-up still further. A report today by the
National Audit Office highlights the need to develop local work to
reach those who are not claiming benefits to which they are
entitled, and proposes the creation of a wider target to tackle
pensioner poverty.
In 2004-05, £6 billion was paid out in Pension Credit to 2.7
million pensioner households across England, Scotland and Wales.
This represents between 61 per cent to 69 per cent of the eligible
population, and is 1 million more households than received its
predecessor benefit, the Minimum Income Guarantee. The £20 million
spent in the first two years advertising the new benefit was almost
twice as cost-effective as advertising for the Minimum Income
Guarantee: for every £1 spent on advertising Pension Credit, £55
was paid out in additional benefits. Between 1994-95 and 2004-05
the proportion of pensioners living in relative poverty fell from
27 per cent to 17 per cent, which was an estimated 1.8 million
pensioners in 2004-05.
But the Department has reported that the target to pay Pension
Credit to 3 million households in 2006 will not be met. In part
this is because some pensioners are making a conscious choice not
to claim even though they have been informed by The Pension Service
of their likely entitlement. Pensioners in less deprived areas,
rural areas, areas with large ethnic minority populations and areas
with older pensioners are less likely to claim. In 2004-05,
pensioners did not claim between £1.46 and £2.07 billion in Pension
Credit.
Good progress has been made in developing the Local Service,
which aims to increase benefit take-up among pensioners and
generate additional benefits to pensioners, which were worth around
£260 million a year in 2005. Many of those helped are in the most
vulnerable groups, who would otherwise miss out, but its activity
is often face-to-face and therefore achieving full take-up this way
would be very expensive.
The Pension Service is taking a joined-up approach across the
range of benefits and services for pensioners and is working in
partnership with local government and voluntary sectors. Working
out how to reach pensioners who are not claiming their entitlements
requires local knowledge, but the Local Service’s ability to tailor
their work to local circumstances is sometimes restricted by
national directives. Therefore, Local Service managers should be
given greater autonomy and flexibility to respond to local
needs.
The Pension Credit Public Service Agreement target has been
successful in concentrating efforts on maximizing take-up, but the
benefit is only one of a number available to low income pensioners,
some of which can have just as important an impact. For example,
the NAO estimates that increasing take-up of Pension Credit by ten
per cent would lift an extra 94,000-107,000 pensioners out of
poverty, while a similar increase in take-up of Housing and Council
Tax benefits would move 130,000 out of poverty. Therefore, the
report recommends that the need to focus on benefits and services
for pensioners more widely than Pension Credit should be reflected
in a target designed to cover the range of activity which aims to
tackle pensioner poverty.
Take-up of Housing and Council Tax benefits has fallen between
1997-98 and 2003-04, by five and ten per cent respectively. Seven
out of ten pensioners who are entitled to Housing Benefit but not
claiming it are living in relative poverty. The Department should
apply techniques used for Pension Credit to identify potential
recipients of other benefits.
The NAO study found a continuing lack of information on the
cost-effectiveness of different approaches to increasing take-up.
While the effectiveness of the marketing of Pension Credit has been
well evaluated the Department for Work and Pensions should
undertake further work to identify what works best in a range of
other types of take-up initiatives. Pension Centre staff are also
often unclear to what extent they should point customers towards
other services, and a clear policy on The Pension Service’s wider
role is needed.
Sir John Bourn, head of the National Audit Office, said
today:
“Since I reported in 2002, the Department has made
significant progress in encouraging pensioners to take-up the
benefits they are entitled to. Reaching those who are still not
claiming is a formidable challenge, and requires the use of a
number of different approaches, tailored to meet the needs of
particular groups.
"I am pleased to see that more than one million more households
receive Pension Credit than received its predecessor. Similar
progress with other benefits should be the next step in pursuit of
further progress towards what must be the overall goal: reducing
pensioner poverty.”
Notes to Editors:
- This report follows the 2002 report Tackling pensioner poverty:
encouraging take-up of entitlements, and assesses the progress made
against its recommendations and what remains to be done.
- The Pension Service was created in 2002 as an executive agency
of the Department for Work and Pensions. Pension Credit replaced
the Minimum Income Guarantee in October 2003. Pension Credit is the
second largest benefit by value paid by pensioners, accounting for
£6 billion in 2004-05, compared with £48.8 billion in State Pension
payments. It has two parts: Guarantee Credit and Savings Credit.
Guarantee Credit guarantees anyone aged 60 or over a minimum weekly
income, which in 2006-07 is £114.05 for a single person or £174.05
for a couple living together. Savings Credit rewards people aged 65
or over who have saved for their retirement, and in 2006-07 the
maximum payable is £17.88 for a single person and £23.58 for a
couple living together.
- Housing Benefit is an income-related benefit and can cover up
to 100 per cent of the recipient’s rent. Council Tax Benefit is
also income-related and is worth up to 100 per cent of a
recipient’s Council Tax bill. Pensioners receiving the Guarantee
element of Pension Credit are automatically entitled to full
Council Tax Benefit. Both Housing Benefit and Council Tax Benefit
are administered by local authorities.
- The Local Service employs 2,500 full-time equivalent staff and
provides nationwide coverage of benefit take-up work, targeted
specifically at pensioners. It offers full entitlement checks
across all benefits and predominantly provides a face-to-face
service.
- Press notices and reports are available from the date of
publication on the NAO website, which is at
www.nao.org.uk. Hard copies can be obtained from
The Stationery Office on 0845 702 3474.
- The Comptroller and Auditor General, Sir John Bourn, is the
head of the National Audit Office which employs some 800 staff. He
and the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 52/06
All enquiries to Nick Morrison, NAO Press Office:
Tel: 020 7798 7934
Mobile: 07796 940746