“[The] DWP should develop a strategy for benefits take-up in England by the end of 2025.” So said the recent Work and Pensions select committee report on pensioner poverty.
Even the Secretary of State said it is a ‘scandal’ that so many people who should receive Pension Credit don’t. With 1 in 6 pensioners living in poverty, getting means-tested benefits to those who need them is a central method of helping people out of financial hardship.
Pension Credit is the main means-tested benefit for older people. It brings people’s income up to a basic minimum to help them pay for the essentials. For a single person, that is £11,809 a year. But 1 in 3 people who should get it don’t. This is a longstanding challenge with no easy answers.
Increasing benefit take-up
It’s an issue that was squarely in the news during the past year. After the Winter Fuel Payment was means-tested in July 2024, receiving Pension Credit was the main way to keep receiving it. As such, there was a big spike in Pension Credit claims in autumn 2024, and between July 2024 and May 2025, 60,000 more people were awarded Pension Credit – 57% more than in the same period the previous year.
But we don’t yet know what the extra successful claims mean in terms of overall take-up. The most recent figures are from 2022/23, and estimate that 700,000 households are missing out. Given this, and that we won’t see a one-off spike like that again, we must keep working to increase take-up. And a new policy development, which plans to bring together Pension Credit with pensioner Housing Benefit, could make a real difference.
Pension Credit, Housing Benefit and take-up
Pension Credit and Housing Benefit can change the lives of older people on low incomes, including those struggling with the cost of renting throughout retirement. But there is a take-up problem – too many people are not receiving one or other benefit.
Number of UK pensioners missing out on benefits, 2022/3:
|
Benefit |
Number of households missing out |
Take-up rate |
Average missed claim per year |
Total missed out |
| Pension Credit | 70,000 | 65% | £1,092 | £1.3 billion |
| Housing Benefit | 240,000 | 83% | £3,744 | £890 million |
A couple of things to note:
- Hundreds of thousands of older people are missing out on Pension Credit and/or Housing Benefit.
- Housing Benefit has a much higher take-up rate than Pension Credit.
There are some people getting Housing Benefit who should also get Pension Credit but don’t. There are others who get Pension Credit who should also get Housing Benefit but don’t. There are links between the benefits already.
When someone applies for Pension Credit, the Department for Work and Pensions (DWP) shares information with the relevant local authority, which can start a Housing Benefit application. This can work well but is inconsistent – the Housing Benefit application doesn’t always get completed. Plus, when someone makes an Housing Benefit application with the local authority, there is no reciprocal sharing of information with DWP to start a Pension Credit claim.
Bringing together these benefits could increase take-up for both, which is one of the Government’s aims. This seems plausible, especially for people who get Housing Benefit but not Pension Credit. They may have claimed Housing Benefit as they know they need help with rent but don’t know about Pension Credit, think they are ineligible or assume that it pays very small amounts. A combined system could mean they do get Pension Credit – plus the various passported benefits like discounts on energy bills and health costs.
What we know so far
The Government has had plans to bring together Pension Credit and Housing Benefit for 15 years.
In 2010, the DWP announced plans to ‘consolidate support for rent with the help available for other housing costs within Pension Credit.’ There followed a long story of delays to the introduction of Universal Credit, with the plans pushed back several times.
But Universal Credit is nearing completion, and the Government has said it wants to have the new system up and running by 2026. In June the Pensions Minister said, “We are working to a 2026 timeline for new claims to be covered by a merged administration.”
Work is underway. In December 2024 the Government signed a £1m deal with IBM to explore technical solutions. In March 2025, the Government said the DWP was ‘working closely with local authorities’, and ‘undertaking detailed policy exploration to identify the best approach’. So, we could have a new system by next year. But there are some questions, risks and limitations.
1. Single benefit vs. separate benefits?
Perhaps the biggest question is: will the reform result in a single benefit or keep two distinct ones that are more closely linked?
A single benefit is implied in the 2010 intention to consolidate support for rent within Pension Credit, and the clause in the Welfare Reform Act 2012 that provides for a new ‘housing element’ to Pension Credit. The alternative is that the benefits remain distinct, but the application and administration processes are combined. For older people, this might look like applying for two benefits through a single portal. The second option is perhaps more likely – in April, Sir Stephen Timms MP, Minister at the DWP, talked about it in terms of “bringing together the administration of pensioner Housing Benefit and Pension Credit”.
2. Changes to eligibility?
Housing Benefit and Pension Credit have different eligibility rules. For example, with Pension Credit, the first £10,000 savings are disregarded and savings above that are translated into ‘tariff income’ – each £500 equates to £1 per week in income.
In contrast, Housing Benefit has a hard capital limit – if you have savings over £16,000 you are not eligible. Will the new system keep these different eligibility rules for the two benefits or align them for a single benefit? Any change to the rules could end up excluding people. When asked, the Pensions Minister did not give any detail, saying “we are considering the full range of how this administration works”.
3. Local or central?
Currently, local authorities administer Housing Benefit while the DWP administers Pension Credit. A key question is whether the new system will be locally or centrally administered. There are pros and cons either way.
Housing Benefit claims give local authorities a point of contact with older people who they can then provide holistic support to – things like social care, Council Tax Reduction, isolation prevention, and exercise schemes. Local authority staff are used to working with older people to assess their eligibility for Housing Benefit, including more vulnerable people with complex health needs or those living in supported housing.
On the other hand, a centralised system would ensure a consistent service, avoiding a postcode lottery and the complexities from local authorities using different IT systems. DWP has more access to information about people with which to build up a holistic picture of their lives and ensure they receive all their entitlements. In future, DWP may be able to seamlessly transition people from Universal Credit to the new merged benefit when they reach State Pension age.
But arguably the best outcome could be a combination of central and local administration. One option – assuming the benefit has two components – could be a model with a single application portal assessing both benefits, with housing support delivered by local authorities while the Pension Credit component remains centrally administered. A partnership model could reflect the ‘no wrong front door’ – claimants can access the support they need without having to know which agency delivers it.
4. Housing costs?
Lastly, there are some specific issues with housing costs, identified from the similar transition to Universal Credit. People in social housing often want their benefit to be paid directly to their landlord. This is possible but became harder to arrange under Universal Credit. Would it be possible under a merged benefit? And some service charges originally covered by working-age Housing Benefit were not transferred over to Universal Credit. These could be difficult for pensioners on tight budgets to suddenly start paying.
Communicating the new system to older people
However the new system is designed, it must be communicated clearly so people understand it. Here are some potential misunderstandings to avoid, otherwise people may not apply when they should or vice versa:
- People think they can only claim the ‘new benefit’ if they are a renter.
- People who rent think Housing Benefit has been abolished.
- People think eligibility (for either element) has been restricted.
- People think eligibility (for either element) has been widened.
Potential progress – but a single benefit would be risky
Age UK supports the intention to increase benefit take-up through a simplified system. If done right, merging the administration and applications but keeping two distinct benefits would simplify what many people experience as complicated and stressful. This could increase take-up of both Pension Credit and Housing Benefit, which is critical in tackling pensioner poverty. In getting benefits to people entitled to them, it could relieve their financial burdens, improving their health and wellbeing.
With our experience as a trusted organisation giving advice to older people and their families every day, we want to support this development with insight and constructive ideas. We look forward to the Government’s consultation. But there are risks, especially if a single new benefit is created and in a rushed way. The experience of merging multiple benefits into Universal Credit has been difficult, not least with migrating people onto it, and there are lessons to be learned – including investing in design and engaging with users. The 2026 timescale is ambitious and risks errors from rushing the changes.
More broadly, even if done well, this reform is not the whole answer. For one, it will only increase take-up of either benefit for renters, when most pensioners in poverty are homeowners. For another, it won’t do anything to increase take-up of other vital pensioner benefits like Attendance Allowance. But it is an important piece of the wider puzzle in tackling pensioner poverty.