Publication type
Parliamentary Paper
Series Number
HC 411-II
Series
House of Commons: Work and Pensions Committee Reports
Publication date
July 1, 2009
Abstract:
The level of pensioner poverty has declined markedly since 1997. However, there are still 2 million pensioners in poverty and 1.1 million who live on below 50% of median income. We consider this to be unacceptable, and in this report we look at what more the Government could do to lift pensioners out of poverty.
The Government has implemented a range of reforms in response to the Pensions Commission to make state pension provision more generous and more universal and to increase levels of private saving for pensions. We have, in our previous reports, broadly welcomed the Commission's conclusions and the Government's direction of travel in implementing its findings, and we did not propose in this inquiry to reopen debate on these proposals. Many of these reforms have not come into force yet. We looked at these in our previous report into Pension Reform, and we will return to them once they have been implemented and we can examine how they work in practice.
Pension Credit has lifted large numbers of pensioners out of poverty. Take-up of Pension Credit improved rapidly after its introduction, but has since reached a plateau with many eligible pensioners still not claiming. Despite the best efforts of the Pension Disability and Carers Service (PDCS) it is seeing diminishing returns for its efforts. Take-up of Housing Benefit and Council Tax Benefit amongst pensioners has also declined since 1997. Improving take-up of all three benefits would markedly improve pensioner poverty.
This will lift many people out of poverty in itself, and bring more people into contact with the benefits system, making it more likely that they will claim Pension Credit. Local Authorities need to work much more closely with PDCS, to ensure that information on people who may be eligible for Pension Credit, Housing Benefit and Council Tax Benefit are (with permission) exchanged in both directions. This is not done at present and we recommend that this be trialled in some Local Authorities and, if successful, rolled out nationally.
The Department has put a lot of effort into encouraging pensioners to claim Pension Credit, then directing them towards other benefits. Changing the focus to encouraging people to claim Housing Benefit and Council Tax Benefit (especially if that was re-named a rebate), and then initiating claims for Pension Credit may now be more effective.
We conclude that there should be a single phone line for all three benefits. Despite progress towards joined-up working, PDCS is still sending out letters advising Pension Credit claimants to contact their local council about Housing and Council Tax Benefit, where they will be asked to give all their personal information again. It should not be necessary for them to do this, and doubtless many claimants are lost along the way.
We have been disappointed by the lack of data PDCS collects on Pension Credit take-up, especially amongst vulnerable groups. This makes it very difficult for us to suggest ways to effectively target these groups.
We welcome the 'automaticity pilots' introduced in the Welfare Reform Bill. We welcome the Department taking a long term approach and seeking to find innovative ways to improve take-up. We believe that 'automaticity', if handled sensitively, could be popular with pensioners. It also has the potential to dramatically increase take-up, benefiting a large number of the most vulnerable in society. We call on the Department to examine all options in order to implement it, including changing the legislative and accounting framework, and simplifying the eligibility criteria for Pension Credit.
We believe that pensioners in care homes who live on the Personal Expenses Allowance (PEA) should be entitled to live in dignity. Even though their accommodation and food is provided for them, they should still be entitled to a decent allowance to allow them to live fulfilled lives, and to keep up contact with their families. They need money to buy clothes and toiletries, for phone calls and hairdressing, as well as to maintain a social life, but the PEA is inadequate for these purposes. This is fundamental to achieving well-being in later life. We call on the Department of Health to raise the PEA to £40.
We also looked at the differences between Disability Living Allowance (DLA) payable to those who become disabled under 65, and Attendance Allowance (AA), payable to those who become disabled after the age of 65. DLA has three rates of 'care' and two rates of 'mobility', while AA has only two rates of 'care' and no payment for 'mobility'. We are concerned that the differences of treatment on the grounds of age contravene the clear intentions of the Equality Bill. We do not believe that the difference in the benefits payable to those who become disabled before and after the age of 65 can be objectively and reasonably justified.
We looked at financial advice for pensioners and for those planning for their retirement. We believe that better advice could have a considerable impact on the lives of individual pensioners and would impact on pensioner poverty overall. Money Guidance and the proposed 'one-stop shop' (as proposed in the Building a Society for All Ages Strategy) must become the clear, trusted, source of financial advice which is clearly needed. This service needs to develop public trust and needs to be clearly branded. The Government must focus on both the importance of branding, and the importance of ensuring the service reaches out to those who may not be aware that they need advice. It is not clear how this will operate in practice, but it is essential that Money Guidance and the 'one-stop shop' signpost customers on to other organisations, such as The Pensions Advisory Service and third sector organizations, as seamlessly as possible. If people are advised to contact a wide range of organisations, or are passed from one organisation to another, people will be lost along the way.
We were impressed by the model used by Service Canada, which provides advice on all federal benefits, and provides signposting to other services. Having one source of unstigmatised information for people of all ages is convenient for customers and allows them to reach far more people, including those like poor pensioners and carers who tend not to self identify.
While no pensioner should be expected to work after 65, many would like to. Working longer can allow them to maintain social contacts, and to defer claiming a pension, something that can have a positive effect on their future income. We call for the Default Retirement Age to be abolished and for protection from discrimination for older workers to be strengthened, to ensure that every pensioner who wishes to can continue working.
Past recessions have led to disproportionate numbers of older workers over 50 losing their jobs and never working again. The Department must not allow this to happen again.
Subjects
Link
- http://www.publications.parliament.uk/pa/cm200809/cmselect/cmworpen/411/411ii.pdf
Notes
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