The end of free TV licences for the over-75s should be a trigger for more people to check their entitlement to state benefits, says Stephen Lowe.
Every year, thousands of the least wealthy people in Britain miss out on thousands of pounds of free money. While this is no secret because government data shows the scale of the problem runs to millions of people and billions of pounds, what the data doesn’t reveal is why people are failing to claim.
It may be owing to reasons such as lack of awareness that a certain benefit exists and that they could be eligible to receive it, an overly complex application procedure, or simply that the stigma of claiming benefits puts people off exploring if they’re eligible.
Whatever the reason, failing to claim is bad news, not just because it leaves those in vulnerable circumstances without financial support, but also because it raises a question over the benefit system’s structure and administration. If the system isn’t helping those who it is designed to help, something needs to change.
Other than claiming their state pension, many readers of Money Observer will probably go through life never interacting with the benefit system. But there are good reasons why they may want to re-think that approach.
Pension credit is the key benefit designed to top-up the incomes of more than three million older people. About 40% of them – 1.3 million households – are failing to claim a total of £3.5 billion, or an average of £2,500 per household.
The data indicates that single people and those aged 75+ are less likely than average to claim. But in our view, one of the reasons for the low take-up of pension credit appears to be that many people have never checked if they are eligible.
Our recent research found that four in 10 (42%) of those aged over 65 had never checked if they were eligible for a benefit. The figure is higher among homeowners (49%), and higher still among those aged over 80 (57%).
Of those who had never checked, 67% said they thought their income or savings were probably too high to qualify for a benefit, while 27% said they thought the value of their home would exclude them. Only 4% said they did not want to be a burden on the state, and 1% said that while they probably were eligible, the benefit would be too little to make it worthwhile exploring or claiming.
For the past 10 years, we have analysed information gathered by specialist regulated equity release advisers in our HUB Financial Solutions business, as part of their work to help clients considering releasing some of the value tied up in their homes. Part of the initial client fact find is to check what benefits they are eligible to receive, and if they are claiming them.
Each year we are surprised by the high numbers of people who are eligible to receive benefits but are not claiming anything. Our latest figures show that of the four in 10 who are eligible to receive some benefit, nearly half (46%) are failing to claim any benefit at all with an average annual loss of £1,423 a year. In addition, around one in five (18%) are claiming some benefit, but not receiving the full amount they are due, with an average loss of £2,102 a year.
Such figures strongly suggest that more help should be given to people heading into retirement and we believe that benefits information should be included as part of the free, independent and impartial financial guidance now being offered to those aged 50+ who are considering accessing pension money.
From June this year, the over-75s will no longer receive free TV licences unless someone in the household receives pension credit. If you, or an elderly friend or relative, will struggle to pay that licence fee it ought to trigger the question about whether you/they are eligible for benefits.
Checking is straightforward. The government’s website has key information about eligibility, including links to third-party online calculators, and other sources of information include Citizens Advice and local councils.
Stephen Lowe is group communications director, Just Group.