The Department for Work and Pensions has stated it is reviewing thousands of pensioners’ bank statements following a significant increase in fraud. Overpayments of Pension Credit, a supplement for older people with a low income, surged to £520 million in the fiscal year ending April 2024, a substantial rise from the £330 million the previous year.

These overpayments incorporate £210 million worth of fraud, considerably more than last year’s figure of £120 million. Both rises were highlighted as “statistically significant”, with undeclared financial assets and prolonged stays abroad being the primary factors.

Pension Credit offers additional funds to assist with living expenses for those beyond State Pension age and living on a modest income. It can also contribute towards housing costs, decrease or eliminate an individual’s council tax bill, and grant free TV licenses for those aged 75 or above.

The DWP’s payment raises your weekly retirement income to a minimum guarantee of £218.15 if you are single or a joint amount of £332.95 if you have a partner, with extra sums available for those with children, disabilities or caring responsibilities. Additionally, it can provide reduced charges for NHS dental treatment, glasses, and hospital transport costs.

Furthermore, Pension Credit qualifies for the Warm Home Discount, which provides a £150 payment each winter, reports Birmingham Live.

Government campaigns have been urging more people to apply for Pension Credit, as it’s estimated that up to 850,000 eligible households are missing out on a staggering £1.7 billion of unclaimed benefits. However, recent figures have shown a worrying increase in fraud among recipients, primarily due to claimants spending too much time abroad or not fully disclosing their savings.

Pension Credit has also experienced a “statistically significant” surge in fraud committed by individuals falsely claiming to be single and failing to disclose they were cohabiting with a partner.

The Work and Pensions Committee recently learned that benefit overpayments have soared by £1.4 billion, from £8.3 billion to £9.7 billion, in the last financial year. The DWP attributes half of this rise to Pension Credit claims.

DWP Permanent Secretary Peter Schofield told the committee: “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 remains uncertain whether the planned legislation will be resumed by the next Government.

Recent DWP figures 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 increased from £160 million to a record high of £210 million.

In addition, DWP administrative errors accounted for another £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 for up to four weeks while abroad, provided they still meet the eligibility criteria. This period can be extended by an additional four weeks if a close relative passes away during your trip or if you are overseas due to the death of a close relative and cannot reasonably return to the UK.

Savings and investments up to £10,000 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 would equate to £2 income per week.

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

Your income includes:

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.

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