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Paul Lewis: too few people claiming pension credit

Golden pound sign

The Government has abandoned plans to increase the take-up of pension credit despite admitting that it has undershot its own target by half a million people. It says pursuing those who do not claim "is no longer...value for money", writes Paul Lewis

Four years ago the Department for Work and Pensions set itself the task of paying pension credit to 3.2 million households by 2008.

But it admitted in a report last autumn that "this target will not be achieved" and in February a report on departmental productivity revealed that some targets were not being pursued on grounds of value for money.

"For example, despite significant campaigns to encourage take-up of pension credit the number of customers responding to such campaigns has reduced over time...it would not represent value for money to repeatedly press unwilling eligible people to take up their entitlement".

The latest figures show that the number of people getting pension credit fell slightly between November 2006 and May 2007 from 2,738,560 to 2,733,500.

The autumn report says it now takes "a major effort" just to get sufficient new claims to replace the recipients who die.

It anticipates that between 260,000 and 300,000 pensioners will be lost in 2007/08. But it only expects to achieve 235,000 successful new claims.

It calls this "broadly maintaining existing caseload levels". But in fact by April 2008 those figures indicate that the number claiming pension credit could fall below 2.7 million for the first time since August 2005.

Even the most optimistic forecast would leave the number getting pension credit stuck at 2.7 million - where it has been for three years - and which is half a million below the 2008 target.

That target is itself well short of the number eligible. In 2005/06 the department estimated between 3.8 and 4.3 million could get pension credit and that up to 1.7 million pensioners failed to get the money they were entitled to, saving the Government up to £2.5 billion.

Value for money anyone?

* Paul Lewis is the editor of Saga Magazine's Money News section and the presenter of BBC Radio 4's Moneybox. Paul's opinions are his own and for general information only. Always seek independent financial advice.

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