Over 60s lose money from change

By Paul Lewis BBC Radio 4's Money Box

Mike O'Brien spoke to BBC Radio 4's Money Box about the changes

The government has confirmed that people over 60 will lose money when new rules on backdating benefits begin next month.

People who claim pension credit and money off their council tax or rent from 6 October will have the backdating cut from 12 months to three.

Official figures show that will save the government �300m over three years.

But ministers say a new simplified claims procedure will attract 50,000 extra claims over the same period.

Official figures

The cut in backdating will mean �1,600 less on the average claim when the benefit is first paid.

The government says that will save �170m next year.

But the government is also making it easier to claim these three benefits.

In future, a claim for pension credit will also count as a claim for council tax benefit and, for tenants, housing benefit as well.

In the past, separate forms had to be signed for each.

The government says that will result in 50,000 extra people getting council tax benefit.

New figures

We believe by 2010 this will lift 50,000 pensioners out of poverty Pensions Minister Mike O'Brien

The net result is that the government will save �125m next year.

The figures show the total savings to be �300m over the three years 2008/09 to 2010/11 and another �145m from 2011 to 2014.

Only by 2015/16 will the net cost be zero and then the figures show a rising cost to the government reaching �200m.

Pensions Minister Mike O'Brien told Money Box on BBC Radio 4 that was the only way to get it past the Treasury.

"What we wanted to do was find the extra funding to introduce automatic payment with one phone call.

"We believe by 2010 this will lift 50,000 pensioners out of poverty and that's why we did it.

"If we reduce the backdating from one year to three months we can cover the cost at least for a period of time."

Charity's worry

People with disabilities and those who have difficulties with forms are going to be affected Sally West, Age Concern

The charity Age Concern accepts that making claiming easier is a good thing.

But policy officer Sally West told the programme:

"We are very concerned the government is going ahead with reducing backdating.

"A lot of older people do not claim and they put off claiming for many months.

"People with disabilities and those who have difficulties with forms are going to be affected."

The new rules begin for claims made from Monday 6 October.

Claims can be made by phone before then on 0800 99 1234 (0808 100 6165 in Northern Ireland) and lines are open from 0800 BST to 2000 BST, Monday to Friday and from 0800 BST to 1300 BST on Saturdays.

Pension credit can be claimed by single people over 60 with an income up to �173 a week or up to �254 a week for couples.

Those with savings over �6,000 may get less, or nothing at all.

BBC Radio 4's Money Box was broadcast on Saturday,
20 September 2008 at 1204 BST.

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