Pension credits 'not being applied for'

18/11/2009

A huge shortfall in pension credit take-up has been noted by a new report from Unbiased.co.uk.

The financial website said that up to £2.4 billion of the tax breaks will not be claimed this year, putting the finances of many elderly people under unnecessary strain.

According to the report, between 24 per cent and 31 per cent of pensioners who qualify for the credits do not apply for them.

Confusion over who is entitled to what is a potential factor behind the shortfall.

Karen Barrett, chief executive of Unbiased.co.uk, said: "The areas of pensions and taxation can be complex issues, but it is still important for people to claim vital sources of retirement income in the form of tax credits.

Kevin Still, EuroDebt director, added: “We have a considerable number of over-60 clients on Debt Management Plans and income optimization is very important both before and after retirement. Benefit systems can be complex and many people are unaware of both means tested and non-means tested benefits that they are entitled to. It is increasingly the role of money and debt advice agencies to include this as a core part of their service. It can make a significant difference to the debt solutions available to them.

"We generally look for at least £250 disposable income for an Individual Voluntary Arrangement [IVA] on over £20,000 of debt. Our average over-60 client has over £28,000 of debt, but is often short of disposable income, so looking at way of increasing income is important. Many people of pension age now need to supplement their income.”

Pension credits are available to British over-60s and provide a guarantee that their taxes will not take their incomes below £109.45 per week for a single pensioner and £167.05 for couples.

Tags; Income Worries and Debt, Retirement Money Problems,

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