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Page last updated at 15:06 GMT, Saturday, 29 March 2008

Minister scraps pension target

By Paul Lewis
BBC Radio 4's Money Box

A stressed older man
Many find the pension credit system daunting says Age Concern

The government has scrapped a key target to get more than three million pensioner households claiming pension credit.

The target should have been reached by April 2008 but has been missed by around half a million households.

Despite that, Pensions Minister Mike O'Brien said he would not make payments automatically without a claim.

He said he would not set another date for the target but hoped to get 235,000 new claims this year.

Who can claim

Pension credit tops up the income of people over 60 to 119.05 a week (124.05 from April 7th).

Individual people who... do not claim are missing out on an average of 26 a week
Sally West, Age Concern

Couples get more.

More than four million households are estimated to be eligible, but as many as four out of ten fail to claim.

Sally West of Age Concern told Money Box on Radio 4 that cost them dear.

"Individual people who are entitled to pension credit but do not claim, are missing out on an average of 26 a week, which can make a big difference to people living on a low income.

"If you take the three benefits - pension credit, council tax benefit, housing benefit - the estimate is that up to 4.6bn is unclaimed each year."

At the moment about 2.7 million households claim pension credit and that figure has been fairly static for three years.

Lack of uptake

We are not going to... continue with a target which it was clear we are not going to meet
Mike O'Brien, Minister for Pensions reform

In its latest business plan the government's Pension Service said "it would not represent value for money to repeatedly press unwilling eligible people to take up their entitlement."

The Minister for Pensions reform, Mike O'Brien, confirmed this approach.

He told the programme:

"We've pretty well got to saturation in terms of those people who are likely to just apply.

"We can work as hard as we can, but when we are contacting people five times over an 18 month period and they are still saying 'we don't want to apply' there is a limit to how far you can go."

He added, "Our target now is 235,000 new applications [per year] by the end of the month and we are on target for that.

"What we are not going to do is continue with a target which it was clear we are not going to meet.

"I am not setting a target of 3.2 million for another date, no."

Rejecting calls to pay pension credit automatically without a claim he said:

"We do of course look at the information we have through the tax system to see if we can encourage people to claim.

"We try to make it as easy as possible and by October it should all be automated.

"They make one call and get state pension, pension credit, council tax benefit and housing benefit, assuming they are entitled to it."

BBC Radio 4's Money Box was broadcast on Saturday, 29 March 2008 at 1204 GMT.

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