Pension credit 'cliff edge' that penalises people just over income cut-off should be looked at, say MPs
Pension credit tops up weekly income to a minimum of £227.10 for single people and £346.60 for couples, and is worth £4,000 on average a year to those eligible.
But it also opens the door to thousands of pounds of extra help with household bills, from housing costs to TV licences, which people lose if they are just over the income threshold.
The case for a 'taper' to mitigate the impact on older people who just miss out on these benefits should be considered, says the cross-party work and pensions committee in a new report on pensioner poverty.
Not qualifying for 'passported benefits' potentially makes people worse off than those with slightly lower incomes, the MPs point out.
'The fairness of the pensions credit eligibility criteria where if you are a penny above the threshold, you miss out on thousands of pounds, also needs to be looked at,' said committee chair Debbie Abrahams MP.
Her committee also asked the Government to investigate the effect of the 'mixed age' rule, which bars couples with one younger member from pension age benefits, on those with health conditions and caring responsibilities.
The work and pensions committee called on the government to launch a national strategy to tackle pensioner poverty, and to decide on and provide for a minimum level of income that provides dignity in retirement.
Once set, it should create a plan for everyone to reach that level, including a review of those on the old pre-2016 state pension, say MPs.
They note the old system, which involved earnings-related top-ups, disadvantaged women and that 2.1million people receive less than the old basic state pension, currently worth £9,200 a year.
The report says the number of pensioners below the minimum needed for a 'socially acceptable standard of living' almost doubled to 2.8million in the 15 years to 2023.
Meanwhile, experts who gave evidence informed MPs that poverty caused accelerated ageing, and there was an 18-year healthy life expectancy gap between poorer areas and wealthier ones.
'A survey of hard-up retirees by the committee painted a sense of unfairness and sometimes helplessness, with one respondent stating they had only enough for 'basic survival', while another answered that they felt they were 'shrinking' as an individual with no hope for change,' said the committee.
A plan to tackle pensioner poverty
The need to improve take-up of pension credit was thrown into 'sharp relief' by the decision last summer to link it to Winter Fuel Payment eligibility , said the committee.
The Government has since U-turned and announced all pensioners with an income of up to £35,000 should receive the Winter Fuel payment this year.
But it told MPs on the committee that overall there had been an additional 60,000 pension credit awards compared with the previous year.
The report said: 'Long experience and extensive research demonstrate that the main barriers to claiming relate to pride, not wanting to ask for help and a feeling that "benefits are not for people like me".'
It welcomed the Government's commitment to increase take-up but said it should put in place the resources needed to process claims in an 'efficient and timely manner', and helpline advisers able to help people with more complex cases.
MPs also urged the Government to look at a change that would help carers, who are currently required to apply for carer's allowance even when they don't qualify for the payments in order to get higher pension credit.
They noted Government plans to merge housing benefit and pension credit, and bring this move forward to April 2026, two years earlier than planned.
Other topics explored in the report included the link between poverty and ill health and its impact on the NHS and social care services, and the trend towards more people renting in the private sector in old age rather than owning their home.
Committee chair Debbie Abrahams said: 'Poverty is insidious. It isolates, damages health, and strips you of dignity. After decades of contributing to society dignity in retirement is the least you deserve.
'To boost incomes, the Government needs to come up with a strategy to increase pension credit take-up. It's a scandal that so many have missed out for so many years, often through an aversion to claiming benefits altogether, or lack of support.
'Ultimately, the Government should decide what it thinks is enough for a dignified retirement, and then work to ensure that all pensioners are on at least that level.
'Faced with a combination of high energy costs, ill-health and ever higher rates of pensioners in more costly privately rented accommodation, tackling pensioner poverty is not simply a Department for Work and Pensions issue.
'So, we're calling for a nationwide, cross-government strategy for an ageing society that should be rooted in equity and wellbeing.'
Abrahams welcomed the Pensions Commission launched this week to look at future pensions, but added: 'We are keen to ensure that those reliant right now on a state pension that leaves them short are looked after too.'
A Government spokesperson said: 'Supporting pensioners is a top priority, and thanks to our commitment to the triple lock, millions will see their yearly state pension rise by £1,900 this parliament.
'We have also run the biggest-ever campaign to boost pension credit take-up, with nearly 60,000 extra pensioner households being awarded the benefit, worth on average around £4,300 a year.'
'But we know there is a real risk that tomorrow's pensioners will be poorer than today's, which is why we are reviving the Pensions Commission, to tackle the barriers that stop too many people from saving.'
'One woman worked until age 75, but had only £10 a week after bills'
Caroline Abrahams, charity director at Age UK, welcomed the 'thoughtful' committee report which she said came closer to proposing workable solutions than anything successive governments have produced in recent years.
'This is to the committee's great credit, but it is also an indictment of the lack of focus from our political leaders in preventing and tackling pensioner poverty, the incidence of which is growing, with the result that approaching three million older people are now on less than is required for a minimum decent standard of living.
'One woman quoted in the report said she had worked to 75 but now had only £10 per week after bills. She said: 'It's not living. I am having to cut down on everything and it is taking its toll on my mental and physical health."
'Many of the individual recommendations in the report are excellent and we would particularly spotlight those relating to the need for a cross-government strategy on an ageing society; an Older People's Commissioner in England; a social tariff for energy; and a comprehensive DWP strategy to promote benefit uptake, including of pension credit, the low take up of which this cross party Committee rightly terms "a scandal".
'The Committee also correctly questions the fairness of the "mixed age couple" benefit rule –– which can mean people in their 70s and beyond still receiving working-age benefits – and the adequacy of financial support for older people who rent their homes.'
Independent Age chief executive Joanna Elson said: 'The Work and Pension's Committee has highlighted the urgent truth; the UK needs a strategic approach to tackle pensioner poverty.
'The older people Independent Age speaks to are living on desperately small incomes, forcing them to make drastic cutbacks. They are going to bed in hats and coats, eating one small meal a day and washing less to save on water. This is not right.
'Our own research highlights the importance of people having an adequate income in later life, particularly those reliant on just the state pension and social security system.'
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