Pension credit target "will not be met"

Pension credit target "will not be met"

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Friday, 21, Jul 2006 08:10

The Department of Work and Pensions (DWP) has admitted it will not succeed in raising take-up of its pension tax credit to its three-million target.

The admission comes in a report published today by the National Audit Office (NAO) which, despite this failing, is largely positive about the government's implementation of pension credit in the UK.

The NAO report cites "real and substantial progress" in the DWP's efforts to improve the numbers of pensioners using their entitlement, noting that one million more retirees are receiving tax benefits than did under the previous benefit, the minimum income guarantee.

Altogether the pension credit system, established in the 2002 pension credit public service agreement, distributed £6 billion in 2004-5 to approximately two-thirds of those entitled to it.

Cost-effective advertising, which generated £55 of benefit distribution for every £1 spent on public awareness campaigns, attracted special praise from the NAO's head, Sir John Bourn.

"I am pleased to see that more than one million more households receive Pension Credit than received its predecessor," Sir John said.

"Similar progress with other benefits should be the next step in pursuit of further progress towards what must be the overall goal: reducing pensioner poverty."

Despite the improvements in pension credit, the report noted falls in housing and council tax benefits between 1997-8 and 2003-4, by five and ten per cent respectively.

Improving pension credit take-up is important because additional income from tax relief will help more pensioners out of the poverty bracket.

Recent research from mortgage lenders Prudential revealed that 14 per cent of all pensioners exist on under £5,000 a year, while ten per cent are forced to live with debts of an average of £15,500.