The Department for Work and Pensions (DWP) is preparing to scrutinize the bank accounts of 1.4 million pensioners in a new effort to tackle fraud and error in the benefits system. As part of the Labour government’s crackdown on benefit fraud, Pension Credit recipients will be subject to stringent checks, although State Pension recipients will be excluded from these checks.
The move comes after Pension Credit overpayments reached £520 million for the 2023-2024 financial year, with a significant portion of this attributed to fraud. The DWP’s new Eligibility Verification Measure, which is part of the Public Authorities (Fraud, Error and Recovery) Bill, will focus on three key benefits: Universal Credit, Pension Credit, and Employment and Support Allowance (ESA).
Why Are Pensioners’ Accounts Being Checked?
According to Coventry Live, the DWP’s decision to check pensioners’ accounts stems from a rise in Pension Credit overpayments, with £210 million of this total being linked to fraud. One of the main reasons for these overpayments is failure to declare savings or assets, as well as instances where pensioners stay abroad for longer than they should, impacting their eligibility.
Pension Credit, which is a means-tested benefit, takes into account a person’s income and savings. While pensioners can have up to £10,000 in savings without affecting their payments, any amount above this threshold leads to a reduction in benefits. For every £500 above £10,000, £1 is deducted from their weekly Pension Credit. This makes the system highly susceptible to inaccuracies, whether intentional or due to a lack of understanding about the rules.
Who Will Be Affected by the New Checks?
The new checks will focus on individuals receiving Pension Credit—a benefit that supports people on low income and provides a minimum income of £218.15 per week for single pensioners or £332.95 per week for couples. The new verification measures are targeted at pensioners who are receiving this benefit alongside a State Pension, private pensions, or other means-tested benefits.
Of the 1.4 million pensioners receiving Pension Credit, 130,000 are located in the West Midlands, with around 760,000 eligible people not claiming Pension Credit at all. The DWP has been actively encouraging pensioners to claim Pension Credit, as it not only provides a weekly income boost but also unlocks other valuable benefits such as Housing Benefit, Council Tax Support, and free NHS treatments.
However, pensioners need to be careful to declare all financial assets accurately to avoid overpayments that could result in significant financial penalties.
What Are the Implications of This Crackdown?
The DWP has explained that the fraud checks will be a part of the broader efforts to combat fraud and error in the UK’s social security system. Overpayments in the benefits system have cost taxpayers billions of pounds annually, with the current estimates suggesting that fraud and error in the system cost the UK approximately £10 billion each year.
Increased scrutiny over Pension Credit claims is expected to reduce the rate of fraud and ensure that benefits are only provided to those who are eligible. However, critics have warned that the new checks could be seen as invasive, particularly for pensioners who may not fully understand the complexities of the reporting requirements.
The government maintains that these actions are essential for securing public finances, while also reinforcing the fairness of the benefits system. Andrew Western, Parliamentary Under-Secretary of State for Transformation in the DWP, assured MPs that State Pension recipients would not be subject to these checks:
“The State Pension will be explicitly excluded, and it will be focused initially on three benefits only: Universal Credit, Pension Credit, and Employment and Support Allowance.”
The new crackdown is seen as a direct response to the increased overpayments in Pension Credit—figures that have risen sharply in recent years. The government believes these measures will ensure that the most vulnerable pensioners receive the correct level of support while eliminating fraudulent claims that drain taxpayer funds.
