Fraudulent claims for pension credit – the vital benefit aimed at helping Britain’s poorest pensioners – is growing, according to official figures.
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.
The DWP said some taxpayers’ money is being lost to pension credit claimants who fail to report a boost in their finances, whether through savings, investments or property, which may make them ineligible for the benefit.
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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Pension credit is a means-tested benefit which tops up the income of around 1.4 million pensioners living on the very lowest sums of money, and can be worth, on average, £3,900 a year.
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.
Separately, the Government also assesses the amount of pension credit lost due to “claimant error”. These honest mistakes saw another £240m of taxpayers’ money lost during 2024-25.
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”.
It adds: “Abroad and capital are the two largest reasons for fraud overpayments and account for 76 per cent of fraud overpayments in 2024-25.”
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?
The DWP treats a case as fraud when a claimant can “reasonably be expected” to be aware they are not meeting the rules.
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.
“I don’t want to be naïve about some of it being deliberate, but the idea there is a large number of pensioners conniving money through malicious fraud seems unlikely,” said Webb.
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.
They can spend longer if they are overseas because of a close relative’s death or for medical treatment.
“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.”
Webb also said some cases may be older people unintentionally breaking rules around how much capital they hold.
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 gradually built up savings over time since they first applied for pension credit, but not realised this has to be reported,” said Webb.
“Some people may have inherited money or property after they started claiming, and not realised this also needs to be notified [to the DWP].”
Independent Age said the pension credit application process was too complicated, calling for it to be streamlined.
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
Vine said the Government should “put its energy” into identifying the estimated 760,000 people who may be entitled to pension credit but are not claiming it.
Around £1.5bn worth of the benefit goes unclaimed each year, according to the official estimate.
Dennis Reed, director of the Silver Voices campaign group for older people, said the £270m lost to fraud last year was relatively low in comparison to the amount of benefits that go unclaimed.
He also believes most of it may be accidental, adding: “We’re not talking about big-time criminality.”
Labour has said its fraud bill currently moving through Parliament will “initially focus” on cracking down on bogus universal credit, pension credit and employment and support allowance claims.
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.
Reed claimed the bill was “a snooper’s charter” and accused Labour of taking a “blunderbuss” way of trying to tackle fraud.
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.
A DWP spokesperson said the department was committed to making sure pensioners get the money they’re entitled to “whilst safeguarding taxpayers’ money from fraud and error”.
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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