DWP warning for pensioners as it investigates bank accounts after fraud 'surges'

A pensioner couple sitting at a table working out their finances
-Credit: (Image: Getty Images/iStockphoto)

The Department for Work and Pensions (DWP) has been examining thousands of pensioners' bank accounts following a significant rise in fraud. The overpayments of Pension Credit, an additional benefit for older individuals with low income, soared to a staggering £520 million in the financial year ending April 2024.

This marks a substantial increase from £330 million recorded in the previous year. Fraud accounted for £210 million of these overpayments, a significant jump from the previous year's figure of £120 million. Both increases have been flagged as "statistically significant".

Income misrepresentation and extended overseas stays emerged as primary causes. Pension Credit functions to provide supplementary income for those over State Pension age with low incomes. It can assist with living costs, help offset housing costs, and potentially forgive ones council tax bill completely, reports Birmingham Live.

Furthermore, it makes you eligible for a free TV licence if you're 75 or over.

The DWP supplement aims to ensure a minimum weekly retirement income--£218.15 for singles and £332.95 for couples, with extra provisions available to those with children, disabilities or carer duties. Additional benefits include subsidised costs for NHS dental treatment and eyeglasses, transportation fares for hospital appointments, and qualifying for the annual Winter Fuel Payment of £150.

Government initiatives have been pushing more people to claim as it is believed that around 850,000 eligible households are not tapping into the Pension Credit, with an astonishing £1.7 billion going unclaimed. However, data shows a troubling increase in fraudulent activities among benefit recipients, chiefly concerning claimants overstaying abroad or withholding information about their total savings.

A "statistically significant" rise in fraud has also been observed in instances where individuals falsely state their single status without confessing they live with a partner when claiming Pension Credit.

The Work and Pensions Committee was recently informed that overpayments in benefits have soared by £1.4 billion, rising from £8.3 billion to £9.7 billion, within the last financial year. According to the DWP, half of this increase comes from Pension Credit claims.

Addressing the committee, DWP Permanent Secretary Peter Schofield clarified: "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 (DWP) is considering implementing new powers to scrutinise the bank accounts of all benefit recipients. The proposal would require banks and building societies to monitor capital levels exceeding the threshold for low-income benefits such as Pension Credit, Universal Credit, and Employment and Support Allowance (ESA).

They would also need to check for extended periods of foreign transactions that suggest a claimant is residing abroad longer than permitted.

These measures are part of the Data Protection and Digital Information Bill, which was not passed before Parliament dissolved in anticipation of the forthcoming General Election on 4 July. It remains uncertain whether the proposed legislation will be resumed by the succeeding Government.

Recent DWP statistics reveal that errors made by Pension Credit claimants - including providing inaccurate or incomplete information or failing to report changes in circumstances - have increased from £160 million to a record high of £210 million.

Additionally, administrative errors by the DWP accounted for another £100 million in overpayments, an increase from the £60 million figure in 2022-2023. The majority of these were due to staff incorrectly assessing an individual's income from personal or workplace pensions.

What are the Pension Credit rules regarding travel and savings?

People who are receiving Pension Credit can continue to do so if they travel abroad for up to four weeks, as long as they still meet the eligibility criteria while away. If you're overseas due to the death of a close relative, or if a close relative passes away while you're abroad and it's unreasonable for you to return to the UK, you can receive Pension Credit for an additional four weeks.

If your savings and investments total £10,000 or less, this will not impact your Pension Credit. However, if you have more than £10,000, every £500 over that amount is considered as £1 income per week.

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

Furthermore, to be eligible for Pension Credit, you must reside in England, Scotland, or Wales and have reached State Pension age. When applying, your income is assessed and if you have a partner, your combined income is taken into account.

However, not all benefits are counted as income. Those that are disregarded 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.