Thousands of retirees could see their pension credit payments cut or stopped as part of a Department for Work and Pensions (DWP) crackdown.
A review of the benefit system could see up to 100,000 state pensioners asked to provide bank statements so the DWP can check if their savings and income have changed since they first claimed.
Pension credit is a means-tested benefit for people over state pension age on a low income, with around 1.4 million households receiving it.
A review into the scheme was launched by then-chancellor Rachel Reeves last year and is expected to help save the Treasury £370m from the overall welfare bill.
We take a look at what the review will do and who it could affect.
What is pension credit?
Pension credit is a government benefit designed to provide extra financial support to people over state pension age, currently 66, who are on a low income, helping with everyday living and housing costs.
For a single pensioner, it can top up weekly income to £238, while couples can receive up to £363.25 a week. This is equivalent to £12,736 a year, based on the full state pension.
The average award is around £87 a week.
What is the review?
The review is looking to help the DWP cut the benefits bill by randomly selecting pension credit recipients to provide bank statements and see if they are getting the correct amount.
The policy was first announced in last year’s autumn Budget, with the DWP now contacting selected claimants as part of case reviews.
Sir Steve Webb, former pensions minister and partner at LCP, said: “In principle, people in receipt of benefits are required to notify DWP if their circumstances change, and this can include increases or decreases in their savings.
“In practise, relatively few people probably realise they need to do this, so the information held by DWP can become out of date.
“Whilst it’s only right and proper that [the] benefit is not paid to people who are well able to support themselves, a large-scale exercise like this risks being seen by the public as snooping and is likely to create resentment.”
Those who decline to provide bank statements may find that their payments are stopped, he said.
Who might be affected?
The review will randomly choose recipients receiving pension credit.
The checks could work both ways, experts have said. Some could lose money if their savings have increased, while others could discover they have been underpaid.
Those who told the department the value of their savings when they first claimed but have now run them down “in the normal course of life”, such as the cost of living, and haven’t kept the DWP updated, are likely to be entitled to more money.
Knowing how much you have in savings is important when working out entitlement. The first £10,000 is ignored when it comes to pension credit, but every £500 above that is treated as £1 of weekly income.
That means someone with £11,000 in savings has £2 a week counted as income – and can therefore affect how much you receive in benefits.
Having an up-to-date bank balance can therefore be good news or bad news.
But those who have received an inheritance or have taken a pension lump sum could find their savings have risen enough to reduce their entitlement.
This would probably save the government money as there are likely to have been more overpayments made than underpayments.
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.”
Sarah Coles, head of personal finance at AJ Bell, said overpayments can also be made if people spend too long 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 chance down any overpayments and claw as much money back as they can.”
How much will the review save people?
According to estimates calculated by The Independent, around 95,000 to 100,000 claimants are expected to see their payments reduced over the course of the work.
This year alone, the DWP expects to claw back £15m from the reviews. This will mean around 10,700 claimants will see their entitlement reduced, based on an average overpayment of £1,400.
The number of pension credit claimants who are selected for review will probably be much higher, although the DWP has declined to share how it is selecting cases.
A DWP spokesperson said: “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 and thanks to our biggest ever pension credit take-up campaign, we have seen an additional 33,500 pension credit awards in 2025, worth on average £87 a week, compared with the previous year.”
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