Many pensioners to see benefit rise

Oct 30 2009 by John Cranage, Birmingham Post

Hundreds of thousands of pensioners with small savings are in for a benefit boost of up to £8 a week when new rules come into force next week.

But millions of older people are still missing out on financial help they are entitled to, says Age Concern and Help the Aged.

An estimated 540,000 pensioner households will see their income increase by an average of £4 a week from November, after the Government changed the way income from savings is worked out for benefit purposes.

Some people with savings over £6,000 who currently just miss out on benefits might also be brought into entitlement by the change and will need to make a claim.

Under the current system, when the Department for Work and Pensions checks someone’s entitlement for pension credit (or the local authority works out housing benefits or council tax benefit), instead of including actual income from savings an “assumed income” is taken into account. The first £6,000 is ignored and after that every £500 over the £6,000 level is counted as producing an extra £1-a-week income.

The new provisions coming into force on Monday will lift the so-called capital disregard limit from £6,000 to £10,000. For people with savings above £6,000 in receipt of pension credit this means that the benefit money paid to them weekly will increase by up to £8. The higher capital disregard will also apply to people aged 60 or over who receive council tax or housing benefit but not pension credit.

Although half a million pensioners will benefit from this change, up to £5.4 billion worth of means-tested benefits is still going unclaimed by older people each year.

Andrew Harrop, head of policy at Age Concern and Help the Aged, said: “The changes to the way income from savings is worked out are good news for hundreds of thousands of older people who can certainly do with a small top-up to their weekly income.

“The fact that savings up to £10,000 will be ignored for the purposes of working out benefit entitlements should encourage more older people on modest incomes to check whether they might be missing out on financial help which is rightfully theirs.

“This small improvement, though, won’t hide the fact that the means-tested system is failing to help many of the older people who most need its help.

“Up to £5 billion goes unclaimed by older people each year and one in three entitled pensioners aren’t claiming pension credit.

“This is why it is so important to move to a system of paying older people their entitlements automatically, rather than relying on them to claim.”