More than £500m was lost last year due to fraud and errors by older people, some of whom are breaking rules about living abroad or the time they spend overseas, the Department of Work and Pensions (DWP) has said.
But campaigners say the rise in pension credit fraud may be down to accidental breaches rather than “big-time criminality”, and called on the Government to make the rules clearer.
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Deliberate pension credit fraud rose from £210m to £270m in the financial year gone by, the latest official figures show – the highest level of fraud to date.
The DWP’s latest annual report says “overpayments due to pension credit claimants going abroad for longer than the permitted duration appears to be a growing problem in addition to not reporting capital changes”.
Pension credit overpayments due to fraud stood at 4.5 per cent in the latest financial year – up from 3.9 per cent the previous year.
Deliberate fraud or accidental error?
However, former pensions minister Sir Steve Webb believes at least some of what the DWP is classing as deliberate fraud among pensioners may simply be accidental breaches of complex rules.
Pension credit is not available to Britons moving permanently to live abroad. Pensioners can still get the benefit if they go on holiday – but only if the trip is for four weeks or less.
“Some breaches of pension credit rules could be accidental,” said Webb, a partner at financial firm LCP. “There may be people visiting a son or daughter in say, Australia, for slightly over four weeks. You could see how that will happen.”
The 24-page application form for pension credit features more than 200 questions, which are mainly about the applicant’s personal finances. While there is not one single savings limit for pension credit, savings do affect if someone is eligible and how much they receive.
“Some people may have inherited money or property after they started claiming, and not realised this also needs to be notified [to the DWP].”
Morgan Vine, the charity’s director of policy, said some cases “showing up as fraud in the statistics” may simply be “people who have struggled to work out the rules”.
Government accused of ‘blunderbuss’ crackdown
Around £1.5bn worth of the benefit goes unclaimed each year, according to the official estimate.
He also believes most of it may be accidental, adding: “We’re not talking about big-time criminality.”
The legislation will grant the DWP the power to ask banks and building societies to verify a benefit claimant’s financial details to check up on their eligibility.
Some vulnerable older people will be put off from even applying for the pension credit “if they worry their bank account will be checked and under scrutiny”, the campaigner added.
They said the department was investing in better data systems and extra staff to prevent pension credit problems. “It’s vital that people report any changes in their circumstances to avoid overpayments that could result in unexpected debt,” they added.
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