More than £7bn may have gone unclaimed in 2003/04 by people entitled to means-tested benefits overseen by the Department for Work & Pensions (DWP).
Old people are losing most by not claiming benefits
The figures have been revealed by a National Statistics study of the take-up of six benefits.
These included income support, housing benefit, pension credit, jobseeker's allowance and council tax benefit.
Between £4.2bn and £7.3bn is thought to have been unclaimed, with an average take-up rate of between 80% and 88%.
The study did not cover all benefits available in the UK.
It omitted those administered by the DWP which are not means tested, such as disability living allowance, incapacity benefit, carers allowance and child benefit.
Child and working tax credits were also left out of the study as they are administered by HM Revenue & Customs.
The amount of money that went unclaimed compared with a total of £29.5bn that was handed out to claimants.
Looking at each benefit, the amounts estimated by National Statistics to have been unclaimed were:
- Minimum Income Guarantee for pensioners (replaced by Pension Credit in October 2003): £770m - £1.58bn. Take-up rate by value 73% - 85%.
- Pension Credit: £1.6bn - £2.4bn. Take-up rate 68% - 76%.
- Income support (non-pensioners): £290m - £1.1bn. Take-up rate 90% - 97%.
- Housing benefit: £760m - £1.4bn. Take-up rate 88% - 93%.
- Council tax: £1.2bn - £1.6bn. Take-up rate 65% - 71%.
- Job seeker's allowance (income based): £790m - £1.3bn. Take-up rate 59% to 70%.
The charity Age Concern said analysis of the figures showed that pensioners were the people losing the most money.
"These figures should deeply concern the government," said Gordon Lishman, Age Concern England director-general.
"It's shocking that up to £4.1bn in money benefits is failing to reach the pockets of pensioners while one in five live in poverty.
"Despite the spiralling levels of Council Tax, around two million older people are missing out on Council Tax Benefit, as £1.1bn lies unclaimed."
Getting better or worse?
The introduction of Pension Credit in 2003 appears to have encouraged 800,000 extra pensioners to make a claim who were not receiving the previous Minimum Income Guarantee.
Other trends are less encouraging.
The study reported a fall in the take up of Council Tax benefit with possibly as many as 2.8 million people not claiming it in 2003/04.
And since 1997/98 the take-up rate may have fallen by as much as 10%.
Among those failing to claim the income-based Jobseeker's allowance, about half were single people aged under 25, usually living at home with their parents.
Again, since 1997/98, that particular claimant rate had fallen by around 10%.
Six million non-claimants?
Superficially the figures suggest that as many as six million people may have failed to claim one or more benefits.
However, a DWP spokeswoman said that figure would be inflated by substantial double counting of individuals who were eligible - but failed - to claim two benefits or more.
For instance, anyone eligible for pension credit is also automatically eligible for council tax benefit.
Despite the huge numbers involved, Stephen Timms, Minister for Pension Reform, portrayed his department's work in a positive light.
"The DWP is working hard to get money to people who are entitled to benefits," he said.
"These figures relate to 2003/2004. Since then we have introduced many initiatives aimed at ensuring people claim their entitlements.
"The Pension Service has already carried out 740,000 home visits since April 2005, and has been phoning those who may be entitled as well as running regional advertising campaigns" he added.