DWP ramps up checks on pensioner savings amid rising Pension Credit fraud

A couple assess their finances at home
-Credit: (Image: Getty Images/iStockphoto)


The Department for Work and Pensions (DWP) has been scrutinising thousands of pensioners' bank statements following a significant surge in fraud. Overpayments of Pension Credit, a supplement for older individuals on a low income, rocketed to £520 million in the financial year ending April 2024, a substantial increase from the previous year's £330 million.

These overpayments included £210 million worth of fraud, a marked rise from the preceding year's £120 million. Both increases were labelled as "statistically significant", with under-reporting of financial assets and prolonged stays abroad being the primary culprits.

Pension Credit provides additional funds to assist with living expenses for those over State Pension age and on a low income, reports Birmingham Live. It can also contribute towards housing costs, eliminate some or all of a person's council tax bill, and offer a free TV licence for those aged 75 and over.

The DWP payment boosts your weekly retirement income to a minimum guarantee of £218.15 if you're single or a combined total of £332.95 if you have a partner. Additional sums are available for those with children, disabilities, or caring responsibilities.

It can also provide access to reduced costs for NHS dental treatment, glasses, and transport costs for hospital appointments, and is one of the qualifying benefits for the Warm Home Discount payment of £150 every winter.

A surge in fraud among Pension Credit claimants has been revealed, sparked largely by individuals taking lengthy trips abroad or failing to fully disclose their savings. This revelation comes despite widespread government campaigns encouraging more eligible households to apply for the benefit, as it's believed up to 850,000 could be missing out on a whopping £1.7 billion of unclaimed Pension Credit.

Furthermore, a "statistically significant" uptick has been noted in cases where claimants dishonestly stated they were single when they were actually cohabitating with a partner.

Recent findings presented before the Work and Pensions Committee highlighted that overall, overpayments for benefits have leaped by £1.4 billion in the last financial year, escalating from £8.3 billion to £9.7 billion. Half this rise is attributed to Pension Credit claims alone, remarks the DWP.

Peter Schofield, the DWP Permanent Secretary, addressed the committee saying: "It is not that we know what is going on with every single person who is claiming Pension Credit. Across the benefit system we do a sample of about 15,000 cases selecting a number of benefits that we do every year and some we do only now and again.

"Pension Credit is one that we looked at this year. We sampled a number of people who were claiming Pension Credit and we said: 'Right, we are going to look at your claim. We are going to go through it. You are claiming on this basis for this amount. This tells us for example that you do not have income coming in from capital to a large extent. Let us understand that. We need to see your bank account.

"Off the back of that sample, we will then identify a certain number of people within Pension Credit who are receiving an overpayment. We extrapolate that out across the whole of the Pension Credit caseload and the percentage of Pension Credit overpayment was 9.7 per cent.

"More than half of that was accounted for by capital, so people had more than they were allowed in terms of savings to claim Pension Credit or they were abroad for a period of time that you are not allowed to claim Pension Credit. That then played into our fraud and overpayment statistics.

"That does not mean that we know who all these people are. That is where the data powers that the Secretary of State was describing come in. This is where this committee and the Public Accounts Committee have held me to account regularly over the last few years, which is how do we start detecting more of the fraud and error that we know is out there? One of the ways we do that is through data."

The Department for Work and Pensions is considering introducing new powers to monitor the bank accounts of all benefit claimants. The proposal would require banks and building societies to check for capital levels above the threshold for low-income benefits such as Pension Credit, Universal Credit, and Employment and Support Allowance (ESA), as well as checking for long periods of foreign transactions that indicate someone is staying overseas longer than the rules allow.

These measures were part of the Data Protection and Digital Information Bill which was not approved before Parliament was dissolved ahead of the upcoming General Election on July 4. It's unclear at this stage if the planned legislation will be picked back up by the next Government.

Recent DWP figures also reveal that errors made by Pension Credit claimants - such as providing inaccurate or incomplete information or failing to report a change in their circumstances - have risen from £160 million to the highest recorded level of £210 million.

In addition, DWP administrative errors accounted for a further £100 million of overpayments, an increase from the £60 million figure in 2022-2023. Most of these were due to staff making mistakes in assessing an individual's income from personal or workplace pensions.

What are the Pension Credit rules on travel and savings?

Pension Credit recipients can continue to receive their benefits while abroad for up to four weeks, provided they still meet the eligibility criteria. In cases where a close relative passes away while you're overseas and it's unreasonable to expect you to return to the UK, Pension Credit can be extended for an additional four weeks.

Savings and investments of £10,000 or less will not impact your Pension Credit. However, every £500 over £10,000 is considered as £1 income per week.

For example, if you have £11,000 in savings, this equates to £2 income per week.

To qualify for Pension Credit, you must reside in England, Scotland, or Wales and have reached State Pension age. When applying, your income, or joint income if you have a partner, is taken into account.

However, certain benefits are not counted as income. These include Adult Disability Payment, Attendance Allowance, Child Benefit, Personal Independence Payment, Housing Benefit, Council Tax Support, social fund payments such as Winter Fuel Allowance, and the DWP Christmas Bonus.