Pension Credit take-up and automation – can the private sector help?



Summary; five recommendations to improve take-up, five to increase automation


Participation; Targeted interventions

  1. Target the children of elderly parents (40-year-old upwards) for PC and over 80s
  2. Red-flag PC to the over 60s on dashboards whose projected benefits are <£10k
  3. Focus on death events – annuity cessation, switch to spouse’s pension
  4. Campaign through equity release and other sources of debt for the elderly
  5. Use of wider awareness campaigns to drive up agenda for support teams

Automation.; harnessing the experience of the private sector

  1. Fintech, open banking has obvious applications to the granting of credit
  2. Insure tech; learning on how to pre-populate applications and auto-verify claims
  3. PDP – reusing processes established to capture and collate data
  4. Payroll – how to integrate RTI through software development (Basda)
  5. Translation- creating DWP representatives within hard to access communities

The business case for the financial services community to engage

Every UK citizen needs a minimum wage in retirement. Whether they get a private pension or not.

The private sector is the beneficiary of substantial tax-incentives and the flows from auto-enrolment. It has a duty to its consumers to promote pension credit and it has a wider duty to society to help alleviate poverty from those who have not saved, but are entitled to state benefits.

The private sector has the financial and human resource to make a difference to take up rates of Pension Credit and the Over 80’s Pension. The current rates of take-up for both are too low but the private sector is generally not helping. This can change.

Now is a good time for raising awareness of pensioner poverty in the private sector. The real fall in pensioner incomes following caps in the inflation linking of pensions means the poorest pensioners face “heating and eating” issues, especially this year. There are new opportunities emerging.


Improving participation; a better targeted approach

How can financial services companies identity non-claiming customers and how can they influence people they don’t know? To answer these questions, we need to know who we are looking to help.

Thomas Wilson of Independent Age says most eligible non-claimants are single, especially after the change to the benefit in 2018 that prevented mixed age couples from claiming. Eligible non-claimants are much more likely to be single women than single men. Eligible non-claimants are also more likely to be 75+.

LCP reckon that up to 100,000 over 80s are not claiming any benefits but could be eligible for the Over 80s pension. Over 70s are also more likely to still be able to claim Savings Credit as an alternative to the core benefit.

Focus on those with elderly relations; Many non-claimants do not speak good English and may not be literate. However, they are likely to be parts of families who are literate, digitally enabled and confident. These people should be highly incentivised to help their loved ones to claim, if only to increase their self-reliance. These are the people that financial services can target.

Harness the power of the dashboard; 2023 will be the first where people will be able to see their total prospective retirement income on a pension dashboard. This will include state and private pensions with DC pensions expressed as prospective income.

Thought should be given to how those approaching or past state retirement age can be nudged into considering applying for state pension. Flagging those whose total income is unlikely to exceed the Pension Credit threshold, could be a useful function of a pension dashboard.

The dashboard may solicit some inquiries, but most eligible non-claimants are not natural dashboard users. The private sector needs to reach out beyond those it is helping to those it does not know

Focus on death-events. Relatively few non-claimants are likely to have private pensions, but it is relatively easy to identify and nudge those over state pension age to consider making a claim. Those in receipt of a small annuity, especially those receiving a residual income following the purchaser’s death, are most likely candidates. This would fall under the new Consumer Duty of the FCA and be incumbent on insurers, including where the annuity is paid because of an occupational scheme “buying out”. A minimum annuity to trigger a nudge might be £3k.

Similarly, many in receipt of an occupational pension (women mainly) may become eligible when a spouse dies. The immediate touch point is when a claim is made for a spouse’s pension, all DB schemes could include information on how to claim pension credit to targeted pensioners (pensions >£3k, on a spouse’s residual and over 66). This could be encouraged as best practice by PASA and tPR.

Focus on elderly homeowners looking for finance

Gareth Morgan of Ferret Systems is aware of the number of equity release inquiries come from households that are income poor. His experience suggests that many home owners do not consider themselves pension credit worthy because they misunderstand that their property is not taken into account in the means test. Money Helper and other debt services, including those within banks have reason to promote pension credit to the elderly homeowner.

Focus on wider awareness within pensions industry

Pension support centres are generally unaware of pension credits and their value (which we reckon to have a typical capitalised worth of £200k+. Simply including pension credit as apart of financial training for those within contact centres will enable support workers to improve the value of their work and elevate morale and self-esteem.


Beyond financial services; – concentrating on activities of daily living.

The DWP’s current campaigns are based on using local newspapers and are not particularly targeted. Conversations with experts suggests that elderly people think about their houses, TV, God and the NHS, more than their income. The financial services sector can help, but the consensus opinion is that the DWP should be building links with the housing sector, the BBC, faith organisations and the NHS.

It needs to consider the commercial or moral drivers for each sector and  provide narratives that create partnerships.

  1. Where they live (Housing benefit and council tax). People may not understand pension credit but they understand housing benefit and council tax relief. , Local Authorities (LAs) are best placed to identify those 66 or over who have already shown they are eligible. Generally, those who have a claim for housing benefit will be successful in a claim for pension credit. But Local Authorities do not benefit from “selling” pension credit – despite them benefiting from increased take up of housing benefit if pension credit is granted. The DWP should consider providing a ’data offer’ for LAs who want to run PC​ This could take the form of a pack of ward level statistics to assist LAs with​ their own Pension Credit uptake campaigns, such as claimant count, 66+ population, % of 66+ population claiming PC.
  2. What they watch (TV licence). The BBC is trusted and could do more. All 75-year-olds should be given easy access to a helpline to get their licence free as part of the renewal. The DWP will pay the licence fee for those on pension credit, without pension credit, the BBC could lose income as well as viewers.
  3. Where they pray. (faith) They trust their church/mosque or other place of worship. A high proportion of non-claimants are likely to claim if encouraged by their faith. The motivation for such organisations is not financial, it is part of their outreach to their congregations.
  4. Where they are sick (NHS). Previous research by the Joseph Rowntree Foundation demonstrated that these health inequalities have a knock-on effect on state spending, leading to higher costs to the NHS and social care services. Research commissioned in 2020 by Independent Age from Loughborough University, building on that JRF research, showed a strong connection between low Pension Credit uptake and increased NHS and social care spending. Using cohort survey datasets – such as Understanding Society, which surveys large numbers of people over a number of years – and local area administrative data – such as NHS spending on hospital ‘bed-days’ – Loughborough estimated that the knock-on effect of 40% of eligible people not receiving Pension Credit is costing the government roughly £4 billion a year in increased NHS and social care costs.


Were all state benefits claimed that were entitled to, including Pension Credit, pensioner poverty would be all but eliminated.  Loughborough University’s research into Pension Credit echoes this, estimating that if everyone who is eligible for Pension Credit received it, pensioner poverty would be reduced by almost 5% down to 11.8%. This would be the lowest pensioner poverty figure since the current measure of poverty came into use. In addition, even those who remain in poverty after receiving Pension Credit (usually due to very high housing costs) would be much better off, with the number of pensioners living on very low levels of income falling from 9% to 4.3%

Automation – harnessing private sector experience

The Pensions Dashboard will offer the financial services community the opportunity to create commercial advantage from data sharing. Here is an opportunity for it to reciprocate.

The private sector should share with the DWP the commercial advantages it has created for itself in data sharing. The pension minister is aware of the resource his department has to devote to the checking of applications for pension credit. He  has publicly stated that he is considering reforming the way that pension credit is awarded. This may result in making the application for pension credit easier and the checking of such applications either fully or partially automated.

In this, the minister could well employ the private sector to consult on how data between the various databases relevant to the pre-population of application forms can be integrated. Specifically

  1. The DWP’s own databases. The first question on the application form is whether the applicant is in receipt of a state pension. Clearly this is information held by a DWP database that could be released at an applicant’s request. There are several other questions that the DWP knows the answer to – were databases to be talking with each other.
  2. Data from HMRC – RTI should be employed to ensure that a check on taxable income can be made automatically. RTI is used to identify auto-enrolment compliance by employers, there is good reason for HMRC and the DWP to automate a solution to ensure claims are genuine without need for manual checking.
  3. Data from the private sector. Until recently this would have been considered a stretch, but information from the pension dashboard could be accessed with the consent of the applicant to ensure that pension entitlements are known. These entitlements may not be known to HMRC.
  4. Other databases – most especially those where information is held on the applicant that may have been asked for already. These may include those holding data on housing benefits, attendant allowance and other state benefits.

The private sector has experience in underwriting and is increasingly moving to automatic underwriting where decisions are taken without manual intervention and with a minimum of sense checking.

Where does this expertise lie?

Fintech – open banking has enabled the expansion of credit to areas previously excluded. The obvious examples are the credit checking systems employed for elderly householders looking to release equity from products. Not only can banks and insurers offering pension finance identify the income needy but provide financial underwriting for credit with obvious application

Insure tech.  Financial technology is not the sole preservice of open banking The creation of automated underwriting of a means tested benefit is analogous to the underwriting of general insurance and of insured life benefits such as annuities and life insurance. It is logical to include in any working group considering the consolidation of available data to pre-populate applications or verify submitted applications, organisations experienced in linking databases for this purpose.

The Pension Dashboard Program; Chris Curry and his team have created processes that allow individuals to access information from the private and public sector about their pension affairs. Much of this may be reusable for digital applications and application verification for Pension Credit. For instance, the entitlements to state benefits, DC pots and pensions not yet in payment

Payroll and RTI. Interaction between HMRC databases and financial services is most advanced in the area of payroll (as evidenced by the use of RTI in auto-enrolment compliance). HMRC know the taxable income of pensioners (from all sources), information that cannot always be found from the dashboard. Basda is the trade organisation that represents the software suppliers integrating payroll systems to Government databases, they have knowledge and skills that can be employed.

Enabling the non-digital and non-English speakers; every church, synagogue, mosque and temple has the capacity to identify members of their congregation who are elderly and income poor. They can act as representatives and sit on an Apollo list for pension credit and Over 80s pensions. The DWP should consider how outreach of this kind could be rewarded so that religious and cultural institutions see “representation” as a sustainable service rather than as a campaign. Representatives can substantially reduce the costs of employing specialists within the DWP to help in making and verifying claims from those without digital or language skills.

Next steps

In conjunction with Independent Age, we suggest that DWP should write and publish a Pension Credit uptake strategy for the next 5 years, in consultation with key stakeholders. The uptake strategy, or action plan, should contain both short- term and long-term actions to raise the uptake of Pension Credit, and set out clear criteria for success of the strategy. The government should consider enshrining this strategy in legislation as a statutory responsibility of the department.

I suggest that two key strands of this strategy be a means of engaging the private sector of the importance of promoting the take up of pension credit (and the over 80 pension).

Henry Tapper  – Chair of Pension PlayPen

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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