Nearly 250,000 Pension Credit claims were made in the most recent tax year, with growing numbers seeking financial support to help them weather the cost-of-living crisis.
New figures released under the Freedom of Information Act reveal that the number of Pension Claims made in the 2022/23 tax year is more than double the 111,000 claims made in the preceding tax year.
Tom Selby, head of retirement policy at AJ Bell, said: “Pension Credit has historically been chronically underclaimed by those who are eligible, with hundreds of thousands of households potentially missing out on thousands of pounds of valuable extra income per year. This is particularly tragic because those who are eligible for Pension Credit are likely to be among the poorest households in the UK.”
Pension Credit is worth around £3,500 a year on average to those who claim it, according to the Department for Work and Pensions, and provides claimants with access to a range of other benefits, including council tax reductions, housing benefit, and cost-of-living payments.
Alice Guy, Head of Pensions and Savings, interactive investor, said: “There’s a myth that all pensioners are wealthy, but in fact millions of pensioners are struggling on a low income and many get most of their income from the state pension. If you’re over state pension age and struggling on a low income, then it’s important to see if you could be entitled to benefits. Pension credit tops up your income to £201 each week for single pensioners and £307 for couples, and it also opens the door to other benefits.”
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If you think you or someone you know maybe eligible for Pension Credit, you can check and claim online, or by telephoning the Pension Credit claims enquiry line on 0800 99 1234.
….but hope may be on the horizon
Inflation eased to 6.8% in the 12 months to July, making it marginally easier for pensioners to make their budgets cover rising costs. However, it remains much higher than the government’s 2% target.
Becky O’Connor, Director of Public Affairs at PensionBee, said: “It’s good news that price inflation is heading down, but with wages rising, pressure remains on the Bank of England to keep interest rates higher. There’s still a way to go before we are out of the woods.
“As inflation subsides and incomes generally rise, some households may feel like they have some disposable income again, particularly as a result of the fall in gas and electricity prices. This boost for some could mean an opportunity to build up more savings again - ideally with higher rates of interest as a reward.”
Those who depend on the State Pension could potentially be looking at a big jump in their weekly incomes from next April, thanks to the triple lock formula, which aims to increase the state pension by whatever is highest of 2.5%, average wages and September’s inflation figure. It looks possible that the State Pension could rise in line with earnings rather than inflation next April, with data this week showing that average pay including bonuses has risen to 8.2%, higher than the current inflation rate.
Alice Guy said: “If wages inflation remains high, then the State Pension could rise £869 next April to £11,469. Pensioners who retired before 2016 and are on the basic State Pension would see their pension income rise from £8,122 this year to £8,788 next tax year.
“The rising State Pension is great news for pensioners, especially the millions that have no other income apart from the State Pension. Pensioners on low incomes have been particularly hard hit by the cost-of-living crisis and it will be a welcome relief to receive an extra boost next April.”