The Department for Work and Pensions (DWP) is launching a review of Pension Credit claims, requiring around 100,000 state pensioners to submit their bank statements. This move aims to verify whether claimants' financial circumstances have altered since they first applied for the benefit.
Pension Credit, valued at an average of £4,300, acts as a gateway benefit, granting access to other support such as free BBC TV licences and council tax discounts. The review was initially established last year by former Labour Party Chancellor Rachel Reeves and is now overseen by the new Chancellor, John Healey. It is expected to contribute towards reducing the overall welfare expenditure by approximately £370 million.
A DWP spokesperson explained, “We know that a claimant’s circumstances can change throughout their claim, which can lead to their claim being incorrect. By reviewing claims, we can ensure claimants are receiving the correct entitlement. The government wants all pensioners to get the support they are rightly entitled to.”
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The review involves randomly selecting Pension Credit recipients to provide evidence of their current savings and income. This process may result in payment adjustments - increases or decreases - depending on updated financial information. Notably, claimants who initially declared certain savings but have since used those funds “in the normal course of life” may be entitled to increased payments.
Sir Steve Webb, former pensions minister and partner at LCP, commented on the review, saying that while benefit recipients are required to report changes in circumstances, many are unaware they must do so, leading to outdated information held by the DWP. He warned that although it is appropriate for support to be directed to those who need it most, widespread checks risk being perceived as intrusive and may cause resentment among claimants.
He also noted that those who refuse to provide requested bank statements could face suspension of their payments. Webb added, “Theoretically, any major change in your savings level should be reported as a ‘change of circumstances’, but I suspect most people don’t do so, which is why catch-up exercises like this need to be run.”
Additionally, Sarah Coles, head of personal finance at AJ Bell, highlighted that overpayments can occur if claimants spend extended periods overseas. She said, “There was a major drive to get people to sign up for Pension Credit last October, so the rise in overpayments may be linked to the spike of applications. The Government is under huge pressure to cut the benefits bill as part of its efforts to balance the books, so it has an incentive to chase down any overpayments and claw as much money back as they can.”