Many poorer pensioners are put off claiming pension credits to which they may be entitled, says a leading charity for the elderly.
More pensioners could claim more money, says Age Concern
A survey conducted for Age Concern suggests that 60% of poorer pensioners find the pension credit system is too daunting to submit a claim.
Many of them think either that the forms are too complicated - or that the questions asked are too intrusive.
The charity says this contributes to as much as £2.5bn going unclaimed.
"Many pensioners are put off claiming benefits because they find the system confusing," said Gordon Lishman, Director General of Age Concern.
"Yet this is money that is rightfully theirs and, if claimed, could make a big difference to their weekly income," he added.
Pension credits were introduced four years ago to top up the incomes of the poorest pensioners.
The government's own research has consistently found that although nearly half of all pensioners are entitled to the extra money, many of them fail to claim it.
The Department of Work and Pensions (DWP) estimates that in 2005-06 the take-up rate was between 60% and 69% by numbers of potential claims, and between 70% and 78% by value.
Earlier this year, the Commons Public Accounts Committee estimated that this meant about 1.6 million people were not getting the money to which they were entitled.
In contrast, 2.6 million people claimed £5.86bn in pension credits that year.
Age Concern argues that to improve matters, pension credit should be paid automatically rather than having to be claimed.
"The DWP, and Revenue and Customs, have the information to be able to work out who is entitled to receive benefits, because they have people's national insurance, income and savings records," an Age Concern spokeswoman said.
Pension Reform Minister Mike O'Brien said the system was far better than its predecessor, the Minimum Income Guarantee, as it was providing money to an extra million pensioners.
"The Pension Service is making every effort to ensure that pensioners take up the benefits they are entitled to," he said.
"Applying for pension credit is easy. It can be claimed entirely on the phone - without any form-filling - in one free phone call to 0800 99 1234.
"Some pensioners are not applying because they think they will get a small amount - but are surprised when they get a significant sum."
The basic guarantee credit tops up the incomes of single pensioners to at least £119.05 a week, and those of pensioner couples to at least £181.70 a week.
More can be claimed by disabled people, carers or people with special housing costs.
Those over 65 with only modest incomes from savings may also be entitled to additional savings credits.
The charity's survey of 1,706 people aged over 60 included 1,010 in the lowest social groups.