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Fairness and Security in Old Age

Part of the debate – in the House of Commons at 1:14 pm on 10th September 2003.

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Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions 1:14 pm, 10th September 2003

We have estimated figures on the numbers of people who are entitled to pension credit in Scotland, as well as in the regions of England and Wales. I am coming to the issue of take-up. I hope that even those who oppose the introduction of pension credit will help us in the campaign, and that all people who are entitled to the benefit will claim it.

Pension credit will be introduced from October this year. For the first time in the history of the welfare state, the Government will ensure that it pays to have saved above the foundation of the basic state pension. Pension credit will reward people aged 65 and over for some of the savings and incomes that they have built up for their retirement. In the past, those who managed to save a little were left no better off than those who had not saved at all. People with capital of £12,000 or more could get no help at all, however low their income. That is the historical situation; no doubt the Conservative spokesman will seek to defend it.

Pension credit is less complex, less intrusive and less bureaucratic, and will give people more. Around half of all pensioner households will be eligible and stand to gain, on average, some £400 a year. The application process has been designed to be straightforward. It involves a simple telephone call on a free phone number. People are sent a form to check, sign and return to the Pension Service. I say to old people who, despite our best efforts to design a simple form, understandably find form-filling difficult, as many of us do, "Throw it in the bin and make the telephone call. In a 20-minute call, one of our trained staff will fill in the form for you. You simply have to verify it."

From the age of 65, most pensioners will have their entitlement fixed for five years, during which they need to report only major life events. We are thus doing away with the weekly means test. We need to communicate to elderly people that the pension credit does not mean an old-style means test. Since April, we have issued mail shots to approximately 1.3 million pensioner households and we shall write to remaining households in the next nine months. I hope that hon. Members understand that that is a colossal exercise and it would be wrong to try to write to all pensioners in the same week or even the same month; we do not want to gum up the administrative works. We are therefore undertaking the work gradually and sensibly for public administration.

People who apply at any time up to October next year will have their credit backdated to this year so that no one will lose out. Of those who have already been through the process—mainly people on the existing minimum income guarantee who have been transferred to pension credit, but also others—we estimate that, even at this early stage, more than 1 million will get more money than they received previously.