The Department for Work and Pensions says it has been checking thousands of pensioners' bank statements after a huge rise in fraud. Overpayments of Pension Credit, a top-up for older people on a low income, soared to £520 million in the financial year ending April 2024, a big rise on the £330 million in the previous year.
The overpayments included £210 million of fraud, a substantial increase on the previous year's £120 million. Both the increases were described as "statistically significant" with under-declaration of financial assets and extended overseas stays being the main causes.
Pension Credit gives people extra money to help with living costs if they are over State Pension age and on a low income. It can also help with housing costs, write off some or all of a person's council tax bill and allow you to get a free TV licence if you're aged 75 and over.
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The DWP payment tops up your weekly retirement income to a minimum guarantee of £218.15 if you're single or a joint total of £332.95 if you have a partner, with additional amounts available to those with children, disabilities or caring responsibilities. It can also provide access to reduced costs for NHS dental treatment, glasses and transport costs for hospital appointments, and is one of the qualifying benefits for the Warm Home Discount payment of £150 every winter.
Government campaigns have encouraged more people to apply because it's thought up to 850,000 eligible households are missing out, with as much as £1.7 billion of Pension Credit going unclaimed. But figures have revealed a startling rise in fraud among those who are receiving the benefit, largely due to claimants going abroad for too long or failing to fully declare the amount of savings they have stashed away.
Pension Credit has also seen a "statistically significant" increase in fraud perpetrated by people who falsely claimed they were single and hadn't declared that they were actually living with a partner.
The Work and Pensions Committee recently heard that, overall, benefit overpayments have risen by £1.4 billion, from £8.3 billion to £9.7 billion, in the past financial year. The DWP says half of that increase is within Pension Credit claims.
Speaking to the committee, DWP Permanent Secretary Peter Schofield explained: "It is not that we know what is going on with every single person who is claiming Pension Credit. Across the benefit system we do a sample of about 15,000 cases selecting a number of benefits that we do every year and some we do only now and again.
"Pension Credit is one that we looked at this year. We sampled a number of people who were claiming Pension Credit and we said: 'Right, we are going to look at your claim. We are going to go through it. You are claiming on this basis for this amount. This tells us for example that you do not have income coming in from capital to a large extent. Let us understand that. We need to see your bank account.'
"Off the back of that sample, we will then identify a certain number of people within Pension Credit who are receiving an overpayment. We extrapolate that out across the whole of the Pension Credit caseload and the percentage of Pension Credit overpayment was 9.7 per cent.
"More than half of that was accounted for by capital, so people had more than they were allowed in terms of savings to claim Pension Credit or they were abroad for a period of time that you are not allowed to claim Pension Credit. That then played into our fraud and overpayment statistics.
"That does not mean that we know who all these people are. That is where the data powers that the Secretary of State was describing come in. This is where this committee and the Public Accounts Committee have held me to account regularly over the last few years, which is how do we start detecting more of the fraud and error that we know is out there? One of the ways we do that is through data."
The Department for Work and Pensions is keen to introduce new powers to monitor the bank accounts of all benefit claimants. The idea is that banks and building societies would be required to check for capital levels above the threshold for low-income benefits such as Pension Credit, Universal Credit, and Employment and Support Allowance (ESA), as well as checking for long periods of foreign transactions that indicate someone is staying overseas longer than the rules allow.
The measures form part of the Data Protection and Digital Information Bill which was not approved before Parliament was dissolved ahead of the upcoming General Election on July 4. It's unclear at this stage if the planned legislation will be picked back up by the next Government.
The latest DWP figures also show that errors made by Pension Credit claimants - such as providing inaccurate or incomplete information or failing to report a change in their circ*mstances - have risen from £160 million to the highest recorded level of £210 million.
Meanwhile, DWP administrative errors accounted for a further £100 million of overpayments, a rise on the £60 million figure in 2022-2023. Most were down to staff making mistakes in assessing an individual's income from personal or workplace pensions.
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What are the Pension Credit rules on travel and savings?
People can continue receiving Pension Credit if they are going abroad for up to a maximum of four weeks, providing they still meet the eligibility criteria while away. You can get Pension Credit for up to four more weeks if you are overseas because of the death of a close relative, or if a close relative dies while you're away and you cannot reasonably be expected to return to the UK.
If you have £10,000 or less in savings and investments this will not affect your Pension Credit. If you have more than £10,000, every £500 over £10,000 counts as £1 income a week. For instance, if you have £11,000 in savings, this counts as £2 income per week.
In addition, you must live in England, Scotland, or Wales and have reached State Pension age to qualify for Pension Credit. When you apply, your income is calculated and, if you have a partner, your joint income is taken into account.
Your income includes:
- State Pension (even if deferred and not being claimed)
- other pensions (even if deferred and not being claimed)
- any earnings from employment and self-employment
- most social security benefits, such as Carer's Allowance
But not all benefits are counted as income. Those that are disregarded include Adult Disability Payment, Attendance Allowance, Child Benefit, Personal Independence Payment, Housing Benefit, Council Tax Support, social fund payments such as Winter Fuel Allowance, and the DWP Christmas Bonus.
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