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Pension Credit: Finance

Volume 479: debated on Monday 21 July 2008

To ask the Secretary of State for Work and Pensions what estimate he has made of the cost saving from the proposed reduction in the maximum period for claiming backdated pension credit from 12 to three months; and if he will make a statement. (214000)

The proposal to change the length of time allowed for customers to claim pension credit (known as backdating) from 12 to three months is part of a package of pensions measures that will make claiming benefit entitlements simpler and less intrusive and deliver extra support to pensioners. This package includes the introduction of a more automatic claims process for housing benefit and council tax benefit claims made over the phone with pension credit claims, which will benefit around 50,000 pensioners over the next few years. The costs and savings associated with wider pension measures along with the savings produced by the proposed changes to the time allowed for claiming pension credit are set out in the following table.

Estimates of costs/savings

£ million, 2007-08 prices

Total pension measures

Of which: Pension credit backdating

2008

575

-55

2009

-25

-100

2010

0

-95

2015

0

-70

2020

75

-65

2030

150

-55

2040

200

-45

2050

250

-40

Notes:

1. Negative figures represent net savings.

2. The total set of wider pensions measures includes the simplification package and spending on other pension measures in 2008-09, 2009-10 and 2010-11.

3. Figures relate to financial years.

4. Estimates represent combined administrative and benefit costs/savings.

5. Total estimates for the wider portfolio of pensions measures have been rounded to the nearest £25 million.

6. Estimates of pension credit backdating have been rounded using the following convention: figures over £100 million have been rounded to the nearest £10 million and figures between £10 million and £100 million rounded to the nearest £5 million.

7. Other pension measures include the up-rating of the pension credit standard minimum guarantee this year by 4.2 per cent. (more than the earnings commitment made for pension credit over the long term, the relevant average earnings figure was 3.5 per cent.) and the one-off additional amount with the winter fuel payment for the winter of 2008-09.

8. Simplification package includes the following measures: Automatic forwarding of housing benefit/council tax benefit claim details taken alongside a pension credit claim to the local authority, without the need for a signed claim form; reduction of the maximum housing benefit/council tax benefit backdating period from 12 to 3 months; reduction of the maximum pension credit time for claiming period from 12 to 3 months; increasing the length of time pension credit recipients may be abroad without losing their entitlement from 4 to 13 consecutive weeks; and the introduction of an indefinite assessed income period for those pension credit customers aged 80 or over or who have an assessed income period spanning their 80th birthday (benefiting most customers aged 75 or over).

9. Estimated costs and savings are consistent with the 2008 Budget settlement but it should be noted that they are based on a set of assumptions and are subject to change as new data become available.

10. Estimated costs/savings of the pension credit backdating measure has been projected forward from 2011 in line with the growth in the long-run forecast of expenditure on pension credit.

Source:

DWP modelling