Suited , booted and undiluted

It’s refreshing to write an article on the way of Government without fear of reprisal. Anyone in this country has the freedom to publish their opinions  freely so long as they do not constitute a hate crime. I met with the Pensions Minister and his strategy team yesterday because I write this blog and we had a constructive discussion on three big subjects despite my many criticisms of the shortcomings in pension policy and delivery.

We should value and cherish these freedoms, they are not our entitlement, they have been hard won and maintained.

The three subjects that I took to the subject were

1. Reducing Pensioner Poverty; the take up of Pension Credit and whether the benefit can be automatic rather than applied for
2. Turning pots to Pensions. How developments in the permitted links regulations make for a CDC style pooled fund that could turn retail pots into pension today,
3. A common definition of VFM. How we can create and promote a Value for Money standard that helps everyone better understand their retirement savings.

Pensioner poverty and why 850,000 eligible households don’t claim Pension Credit.

In this blog I want to explain the context of our discussion on Pension Credit and why I think it is time that Government considered automating its delivery rather than rely on the current difficult application process.

Why Pension Credit is an important problem

Pension Credit is important as it tops up what people get from the state to a level approximate to the full state pension, it also unlocks many smaller state pension benefits relating to housing , fuel  – even free TV licences.

I quoted Martin Lewis’ figure of 850,000 households who he estimates are eligible but not claiming pension credit as the reason for a policy initiative.

At a Pension PlayPen coffee morning earlier in the day, Gareth Morgan explained what researchers tell us are the  reasons people do not claim.

• They don’t know what pension credit is
• They don’t know if they are eligible
• They worry that by claiming, they will lose out elsewhere

There are other considerations but , according to Gareth, worries about personal dignity and not wanting to be means tested are a long way down the list.

Why Pension Credit is a particularly urgent issue right now

Today is the day of Rishi Sunak’s Spring Statement in which he is expected to announce measures to combat the crisis facing many people from inflation and cuts in real income.

Pensioners are among the worst impacted. Pensions will go up this year by 3.1% – including the triple lock, which were it to fully cover the rise in costs to pensioners , should be going up by much more. Whether that “much more” is 5, 8 or even 10%, is speculative, if we had applied the triple lock this year, we could have expected a state pension increase of 8%, which means pensioners are facing a real fall in the cost of living of 5%.

For those on the breadline, that is 5% they cannot afford to lose, there needs to be immediate financial assistance and I hope that the Chancellor will give that assistance to the poorest pensioners immediately. But that would be  a tactical play, we need a strategic solution to the Pension Credit take up problem.

The timing’s right to get things started

My meeting took place in the Minister’s office. On one wall was a list of all the regional newspapers in the country from the “Kent Messenger to the Hexham Courant”.

The Minister told me that each paper had been contacted this week to run a story on the importance of taking up Pension Credit right now. The Minister also told me we have a Pension Credit taskforce about which surprised me. It is not easy to google.

So pensioner poverty is on the agenda and it was discussed in the House of Commons on Monday of this week.

Stephen Timms , asked  Guy Opperman in questions to the DWP

“Given the scale of the current cost of living crisis, will the Department commit to an ambitious target for increasing pension credit take up across the country and a much more ambitious target to promote it?”

and claimed that

The Department could feasibly work out who those (850,000) households are and simply make them an award of pension credit.

To which Guy Opperman replied

I hate to disagree..but he is wrong, as he know as he did this job between 2007 and 2008, the Department does not know the exact number of a means tested benefit that was set up by Gordon Brown specifically for circumstances where there is not the capability of saying exactly who can apply.

From yesterday’s Hansard ; scribbles are the Pension Minister’s.

But if he doesn’t know who these pensioners are , because they don’t make themselves known, then the Government has a problem. Ignorance is no excuse in the eyes of the law, ignorance is not bliss. The Government is trying to improve things but in my opinion it could try considerably harder

How to solve this problem in the longer term.

We seem very good in this country at identifying who owes tax, we have a system of real time information that appears to work well in telling us where tax is due and ensuring it is paid through the PAYE system.

But when it comes to paying money out, we do not have a PAYE system, instead those who require benefits have to navigate complicated forms , full of traps and those forms have to be checked by DWP officials who approve or turn down claims. This system is expensive to administer and puts off many deserving claimants who would rather not claim than risk being turned down.

There has been no proper survey of how Pension Credit is working for over ten years. The last work done on this was published in 2012 and came from a study by the DWP of 2000 people who had potential claims. Its findings were listed by Gareth Morgan earlier.

Since then , data management has advance, RTI has been introduced and we are moving towards a system where anyone can see pension entitlements on a pensions dashboard. But nothing has been done to help those who may have benefit entitlements.

My request to the Pensions Minister was simple and focussed. That he let me assemble a small group of people who care about pensioner poverty enough to consider this matter in more detail. I have committed to delivering the Minister a three page feasibility study on how we can create a plan to bring down the numbers of non claimants by making the benefit come to the people who don’t know of it, by making eligibility criteria easier and by making the benefit automatic, where there is a clear entitlement. It is no more than what Stephen Timms is asking for.

Is the Treasury the blocker?

I asked Guy Opperman whether the Treasury would let him promote Pension Credit so that take up increased. He reached to yesterday’s Hansard and pointed to his statement in the house showing that new claims for 2020 to 2021 were up 30% on the previous year.

Then with frenetic scribbling he pointed out that HM Treasury in not blocking an increase in Pension Credit take up

Opperman’s scribbles , my thumb

What can you do?

I’ll be writing to one or two people I know , who can help Government with this problem. Gareth is one. If you want to work on this with me, please be in touch.

The ILC , the universities, Age Concern and Age Partnership all tell me we have more data on older people than any country in the world. We have a Real Time Information system that tells us who tax we should pay, a pension dashboard is on the way.  Why are pensioners outsiders? Why can’t the Government use the new technologies to solve a critical problem for those in old age?