Pension Credit shortfalls costing £4bn per year

Independent Age has claimed that the failure to deliver Pension Credit to 1.06 million older people who are entitled to it is costing the health and social care systems an estimated £4 billion per year.

The older people’s charity used new research from the Centre for Research in Social Policy at Loughborough University to reveal that the low take-up is creating significant knock-on effects for the NHS and social care, costing taxpayers an estimated £4 billion per year. This bill to the taxpayer is significantly higher than the annual cost of giving pensioners the £2.2 billion to which they are entitled but are not receiving.  

Pension Credit is currently being received by just 61 per cent of those who should be receiving it – leaving many on a threadbare income and having to choose between heating and eating.

The charity’s report found that the NHS bears the brunt of the additional demand, with pensioners on a low income likely to need more health care and services, such as prescriptions or the use of a hospital bed. The resulting costs to health care systems are estimated to be between £3.02 billion and £4.81 billion per year.  

Those missing out on Pension Credit 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.  

Independent Age says that, if Pension Credit take-up was lifted from 61 per cent to 100 per cent, 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. Therefore, the charity 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.

Deborah Alsina, chief executive of Independent Age, said: “What we can see from this report is that ensuring the poorest pensioners have a livable income is not only the right thing to do, it’s the economically responsible thing to do. 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 per cent 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.”

Ian Hudspeth, chairman of the Local Government Association’s Community Wellbeing Board, said: “There are a range of ways in which older people can receive support and it is essential they are able to access all the benefits and other entitlements that they are eligible for. Improved take-up of pension credit should be an ambition with the primary motivation being to reduce health inequalities, ensure people are kept out of poverty and able to live the lives they want to lead. Any resultant savings in providing health and social care services would be good news and supports the case for increased investment in prevention.

“This helpful report should be considered by government as it develops its proposals for the future of adult social care in England, which needs to include not just older people but working-age adults and all those who use and work in social care. We look forward to the start of promised cross-party talks on the future of adult social care, as soon as possible.”