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EnergyPensioners fail to claim thousands in income
Filed under: Retirement
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MIKE DERER/AP/Press Association Images
So why are people turning down free money, and what can they do about it?
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Failing to claim
A survey by Just Retirement Solutions found that 20% of pensioners are claiming no benefits at all beyond their state pension. Of those who were claiming benefits, a third were failing to claim everything they were entitled to (up from a quarter in 2010).Penions Tools & Tips
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And despite the rising cost of life pushing more retired people into financial difficulties, the number of those not claiming is up from 18% in 2010. In all, this means that anything up to three million pensioners may be missing out.
This tallies with official figures. Earlier this year, the Department of Work and Pensions released figures showing that at around one-third (between 32-38%) of those entitled to Pension Credits fail to claim. The total income lost is between £2 billion and £2.8 billion a year. Its figures show that of those who fail to claim, nearly four in five own their own home.
Why?
There are a number of possible reasons for the shortfall. The first is simply that people don't understand the system. The complexities of the benefits system mean that it's easy to miss out on benefits for pensioners on low incomes, those with caring responsibilities, or those with disabilities. There are an array of options from council tax credits to pension credits and carers allowances, and unless you are familiar with the whole gamut of benefits it's impossible to tell what you might be entitled to.
Thousands of people are therefore slipping through the net because they don't know that the net is available. Stephen Lowe of Just Retirement says: "Our concern is that there are huge numbers of people struggling with their day to day finances who only find out they are missing income when they turn to professional help because they can no longer make ends meet."
Complexity
The second reason is that they are aware they could apply for benefits, but the process is too tortuous. Michelle Mitchell, Charity Director General at Age UK says:"Many older people have had negative experiences when claiming benefits, finding the whole system insurmountable."
The experts say it is essential to check what you are entitled to, and claim where you can. Lowe says your first port of call should be free advice from an organisation such as Citizens Advice, or the Consumer Credit Counselling Service - both of whom have dedicated support centres staffed by people who know the system back-to-front. Age UK can also offer a free benefit check and help with filling in forms. It has a free advice line (0800 169 6565).
Refusal
And finally, there are those who simply do not think of themselves as benefits claimants. Lowe says "Many of those we advise have worked all their lives and have perhaps never claimed any benefits. They know about the state pension, but may imagine that because they own their own homes, often valued at more than the national average, they are not eligible for any."Mitchell adds: "Older people are more likely than any other age group to miss out on their benefits because they are hesitant to claim, don't think they are eligible, or believe the claiming process is over-complicated and intrusive. There is a real need to get rid of the stigma that some people associate with claiming benefits."
The trouble is that life is increasingly squeezing this group, which means many need all the help they can get. Lowe says: "It may be tempting to blame this on today's low savings and pensions returns or high pensioner inflation, but the reality is that more people are retiring on pension funds that are simply too small to sustain them."
And while there is plenty of talk about a new flat rate pension being introduced by this government, it's not going to help those who have already retired, and will continue to have to struggle on the confusing old system that leaves so many of them failing to claim.
10 of the biggest consumer rip-offs
- 1. Mobile data roaming charges<p> <span style="text-align: left; ">Using a mobile phone to make and receive calls, send texts and browse the web while abroad can be extremely costly – especially if you are travelling outside the European Union (EU), where calls can cost up to 10 times as much as at home.</span></p> <div> </div> <div> To avoid high charges, Carphone Warehouse suggests tourists ensure a data cap is in place, use applications to check data usage, turn off 'data roaming', avoid data-intensive applications such as Google Maps and YouTube and use wi-fi spots to update social networking sites.</div>
- 2. PPI<p> <span style="text-align: left; ">Payment Protection Insurance (PPI) is supposed to help people to continue meeting their loan, mortgage or credit card repayments if they fall ill or lose their jobs. However, policies are often over-priced, riddled with exclusions and sold to people who could not make a claim if they needed to.</span></p> <div> </div> <div> At one point, sale of this cover - which was often included automatically in loan repayments - was estimated to boost the banks' profits by up to £5 billion a year.</div> <div> </div> <div> Now, though, consumers who were mis-sold PPI can fight back by complaining to the bank or lender concerned and taking their case to the Financial Ombudsman Service (08000 234567) should the response prove unsatisfactory.</div>
- 3. The Lottery<p> It could be you, but let's face it, it probably won't be. In fact, buying a ticket for the Lotto only gives you a 1 in 13.9 million chance of winning the jackpot.</p> <div> </div> <div> With odds like that, you would almost certainly be better off hanging on to your cash and saving it in a high-interest account.</div>
- 4. Budget airlines<p> No-frills airlines such as EasyJet may promote rock-bottom prices on their websites. But the overall fare you pay can be surprisingly high once extras such as luggage and credit card payment fees have been added - a process known as drip pricing.</p> <div> </div> <div> Taking one piece of hold baggage on a return EasyJet flight, for example, adds close to £20 to the cost of your flight, while paying by credit card increases the price by a further £10.</div> <div> </div> <div> It may therefore be worth comparing the total cost with that of a flight with a standard airline such as British Airways.</div>
- 5. Credit card cash withdrawals<p> Cash advances, which include cash withdrawals, are generally charged at a much higher rate of interest than standard purchases.</p> <div> </div> <div> While the average credit card interest rate is around 17%, a typical cash withdrawal of £500, for example, is charged at more than 26%.</div> <div> </div> <div> What's more, as the interest accrues from the date of the transaction, rather than the next payment date, costs will mount up even if you clear your balance in full with your next payment.</div>
- 6. Supermarket 'deals'<p> Supermarkets such as Tesco and Asda often run promotions under which you can, for example, get three products for the price of two.</p> <div> </div> <div> However, it is only worth taking advantage of these deals if you will actually use the products. Otherwise, you are simply buying for the sake of it, which is a waste of your hard-earned cash.</div> <div> </div> <div> To avoid paying over the odds, it is also worth checking the price per kilo to ensure that larger <a href="http://money.aol.co.uk/2012/05/24/supermarkets-slammed-for-multi-buy-rip-offs/">'economy' packs really are cheaper</a> than the smaller versions.</div>
- 7. Train fares<p> Buy a train ticket at the station on the day of travel and the price is likely to give you a shock - especially if you are travelling a long distance at a busy time of day.</p> <div> </div> <div> However, <a href="http://money.aol.co.uk/2012/03/13/how-to-cut-the-cost-of-your-commute/">you can cut the cost of train travel</a> by 50% or more by going online and making the purchase beforehand - especially if you book 12 weeks in advance, which is when the cheapest tickets are on sale.</div> <div> </div> <div> Other ways to reduce the price you pay include avoiding peak times and taking advantage of so-called carnet tickets, which allow you to buy, for example, 12 journeys for the price of 10.</div>
- 8. Packaged current accounts<p> Most High Street banks offer packaged accounts that come with monthly fees ranging from £6.50 up to as much as £40, with a typical account charging about £15 per month.</p> <div> </div> <div> Various benefits, such as travel insurance and mobile phone insurance, are offered in return for this fee. But whether or not it is worth paying for them depends on your individual circumstances.</div> <div> </div> <div> Before signing up, it is therefore essential to <a href="http://money.aol.co.uk/2012/01/14/maximise-your-current-account/">check that you will make use of enough of the benefits</a>, and that you cannot get them for less elsewhere.</div>
- 9. Overseas withdrawals/card payments<p> Overseas money transfers or travel money purchases attract the same high rate of interest as credit card cash withdrawals.</p> <div> </div> <div> Worse still, most credit cards – and debit cards – also charge you a foreign loading fee if you use them to make purchases while abroad.</div> <div> </div> <div> You can, however, <a href="http://money.aol.co.uk/2012/02/17/how-to-avoid-overseas-bank-fees/">avoid these charges</a> by using a Saga Platinum or Nationwide Building Society credit card.</div>
- 10. Premium rate phone lines<p> Numbers starting 0871 cost 10p or more from a landline, while those starting 09 can cost more than £1 a minute <a href="http://money.aol.co.uk/2012/03/21/call-0800-0808-and-0870-numbers-for-free-from-your-mobile/">from a mobile phone</a>.</p> <div> </div> <div> And the operators of these high-cost phone lines, some of which are banks, often get a cut of the call charges.</div> <div> </div> <div> Most 09 numbers are linked to scams and should therefore be avoided at all costs, while 0871 numbers can often be bypassed by searching for an alternative local rate numbers on the saynoto0870.com.</div>
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