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Pension Credit - The Means Test Flop
This article was published in the September issue of the SPAG Newsletter

The central demand of the Pensioners’
Manifesto, adopted at the recent Pensioners’
Parliament in Blackpool, is for the basic State pension to be raised to what is officially recognised as the minimum weekly income that pensioners need - the so-called “minimum guarantee” of £105.45. The Government argues that there’s no point in paying all of us that amount, because most of us have private pensions and other sources of income. So those who really need the money must apply for Pension Credit (the new name for income support) and go through a means test, reporting all their income and savings to Pension Service officials.
The snag about this, as we’ve pointed out before, is that very large numbers of people entitled to means-tested benefits don’t claim them. The Government has done its best to put that right over the past 18 months, by an unprecedented publicity campaign, but the latest figures show that the problem remains largely unsolved. It’s true that more people are getting Pension Credit than were previously getting income support; but the number entitled has risen even more.

The facts are set out in a Pension Service report, The new Pension Credit: A review of the campaign to May 2004. When the take-up campaign started in April 2003, about 1,750,000 pensioner households were getting income support and another 600,000 were entitled but not receiving it. By May 2004, nearly 2,500,000 households were getting Pension Credit, but the number entitled has risen to about 3,750,000 - so there are now about 1,250,000 non-recipients, twice as many as there were before the publicity started.

The Government’s target, until recently, was to raise the number of households getting Pension Credit to 3 million by 2006, which would still leave the number of non-recipients higher than in 2003. Two months ago, the Chancellor, Gordon Brown, announced a new target of 3.2 million households by 2008 - 200,000 more than the 2006 target. He failed to mention that the numbers entitled are expected to rise by more than 200,000 between 2006 and 2008 - so the number of non-recipients will rise yet again, even if the new target is reached.

The steady increase in the numbers entitled to Pension Credit is a direct result of Government policies. The minimum guarantee is raised each year in line with average earnings, but the basic State pension is not - it rises only in line with prices. The gap gets wider year by year, and the number of people with incomes low enough to qualify for Pension Credit continues to increase.

How much longer will the Government go on claiming that its policies are succeeding, when its own statistics prove the contrary? It's not just a few militant pensioners who are calling for the basic pension to be restored to its proper role as a minimum income for retired people. Practically every national body concerned with pensions policy is saying the same thing. Sooner or later, common sense must prevail.