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Pension Credit take-up costing health, social care systems an extra £4 billion per year

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 in Great Britain an estimated £4 billion per year, says older people’s charity Independent Age.

Pension Credit, a benefit designed to keep the least well-off pensioners out of poverty, is currently being received by just six in 10 (61%) of those who should be receiving it – leaving many on a threadbare income and having to choose between heating and eating.

New research from the Centre for Research in Social Policy at Loughborough University, commissioned and published by Independent Age, has found 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.

Report authors Professor Donald Hirsch and Dr Juliet Stone 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.

The report concluded that if Pension Credit take-up was lifted from 61% to 100%, 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.

Independent Age 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.

Chief Executive of Independent Age, Deborah Alsina MBE, said the report provided even more justification for the Government to take urgent action on improving the woefully low take-up of Pension Credit.

“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,” she said.

“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% 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.”

Pension Credit recipient Bert Pearson, 94, said without the benefit, he would struggle to pay for basic essentials like heating and food.

“They rarely tell you what you’re eligible for – it’s up to you to go and find out for yourself,” Mr Pearson said. “For me, it’s opened up the door to other things, like the winter fuel payment.

“If I had any less than I did now, I’d be struggling to get by. It would make an awful difference.

“Many people don’t realise that when you’re on an income like mine, you have set out pound for pound where it’s going to go. Quite frankly, when you’ve done that, there’s nothing left.”

- ENDS –


• The report, The Cost of Pensioner Poverty and Non-Take-up of Pension Credit, calculates an estimate of the additional costs of spending on health and social care needed for pensioners whose lives have been damaged by poverty.

The report uses data from 2017-18 Family Resources Survey (FRS) to calculate the number of pensioners living below the median income line of 60%. It assumes that anyone not claiming who has below 60% median income is an eligible non-claimant of Pension Credit. This is 1.01 million pensioners. This is very close to the Department for Work and Pension’s own estimate of 1.06 million.

It then uses two methods to identify associations between lower income of this group and higher public costs:

1) Surveys of pensioners that record both their incomes and their self-reported use of public services;

2) Local area data which shows the extent to which having more people in an area on a means-tested benefit is associated with more recorded spending on public services in that area.

Using these two methods the authors have calculated the higher spending costs associated with primary health care, acute and community health care, and social care. The authors hypothesise that the survey-based estimates are likely to be conservative, while the area-based estimates are likely to be a high estimate. As such, they have arrived at a central estimate between the two totals.

The report also uses the 2017-18 Family Resources Survey (FRS) to calculate how the incomes of eligible non-claimants would improve if they claimed Pension Credit and how this would affect pensioner poverty. It estimates pensioner poverty would fall by about a third (from 16.4% to 11.8%) if all eligible non-claimants were to claim. More severe pensioner poverty would fall to very low levels – from 9.0% to 4.3% of all pensioners below 50% median.

• Pension Credit figures come from the Department for Work and Pensions statistics for between April 2017 and March 2018, released in February 2020.

The full report is downloadable below or on:

Pension Credit Independent And and Lough
Download • 1.23MB

The press release is downloadable below.

Pension Credit PR - national - Sept 2020
Download • 27KB



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