“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.”
“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.”
Sir John Bourn, head of the National Audit Office, 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.
ISBN: 0102942315 [Buy from TSO]