DWP Pension Credit Gap – How 760,000 Households Are Missing Out on Essential Benefits

Pension credit is a vital financial support system for older people with low incomes in the UK. It not only boosts their income but also provides access to additional benefits like free TV licences for those over 75 and help with council tax. Yet, despite its importance, a significant number of eligible pensioners fail to claim it.

In the financial year ending in 2025, up to 760,000 eligible families did not claim pension credit, leaving £1.5 billion unclaimed. Although this represents an improvement from 2022, when £2 billion was unclaimed, the issue remains pressing.

Why Pension Credit Matters

Pension credit offers far-reaching benefits:

1. Free TV Licence: Available for pensioners over 75.
2. Help with Council Tax: Reduces living costs for eligible households.
3. Winter Fuel Payments: Now restricted to pensioners claiming means-tested benefits like pension credit.

For many, this support makes the difference between living comfortably and struggling to cover basic expenses.

Link to Winter Fuel Payments

The government introduced significant changes in 2025, tying eligibility for winter fuel payments to pension credit.

• Previously, millions of pensioners received winter fuel payments regardless of income.
• Under the new rules, only those claiming pension credit or similar benefits qualify, drastically reducing the number of recipients from 11.4 million to 1.5 million.

This policy shift has led to an increase in pension credit claims as more pensioners seek to maintain access to winter fuel payments.

Financial Impact

Despite progress, unclaimed pension credit continues to have a significant financial impact:

• 2025: £1.5 billion went unclaimed.
• 2022: £2 billion went unclaimed.

While the percentage of eligible pensioners claiming the benefit increased to 65% in 2025 (up from 63% in 2022), hundreds of thousands of families are still missing out on crucial financial aid.

Barriers to Claiming Pension Credit

Many pensioners are unaware they qualify for pension credit or the additional benefits it unlocks.

Stigma Around Benefits

A cultural stigma associated with claiming benefits discourages some individuals from applying, despite their eligibility.

Complex Application Process

Navigating the application process can be challenging, particularly for older adults who may struggle with technology or find the process confusing.

Policy Changes

While the recent linkage between pension credit and winter fuel payments has increased claims, it also highlights the importance of knowing eligibility rules.

Steps to Increase Pension

The government and advocacy groups can take several steps to address this issue:

1. Raise Awareness

• Public Campaigns: Increase efforts to inform pensioners about their eligibility and the benefits of claiming pension credit.
• Community Outreach: Partner with local organizations to educate pensioners about the application process.

2. Simplify the Application Process

• User-Friendly Systems: Make the online and telephone application processes more accessible.
• Assistance Programs: Offer in-person support for those who struggle with applications.

3. Address Stigma

• Positive Messaging: Emphasize that pension credit is a right for those who qualify, not a handout.

Progress and Future Outlook

While the number of unclaimed cases has dropped—down from 870,000 families in 2022 to 760,000 in 2025—there is still significant work to be done. Ensuring more pensioners claim their entitlements is essential for reducing poverty among older adults and improving their quality of life.

By increasing awareness, simplifying applications, and addressing barriers, the UK can close the pension credit gap and ensure no one misses out on the support they deserve.

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