Government support for pensioners
A Westminster Hall debate on government support for pensioners is scheduled for Wednesday 12 February 2025 at 2:30pm. The debate will be led by Blake Stephenson MP.
In 2024/25 an estimated £166 billion of Department for Work and Pensions (DWP) benefit spending is directed at pensioners – around 58% of all benefit spending in Great Britain. Within the £166 billion total directed at pensioners, State Pensions account for £138 billion (83%). Disability benefits for pensioners are forecast to total £14 billion, housing benefits £7 billion, and means-tested Pension Credit £6 billion.
Total benefit spending directed at pensioners in Great Britain is forecast to increase by almost 10% in real terms by 2029/30, reaching £182 billion (at 2024/25 prices).
DWP benefit expenditure statistics do not include Northern Ireland, where pensioner benefits are administered by the Department for Communities.
The State PensionThe State Pension is the central pillar of government support for older people. In 2022/23, nearly all people in the UK over State Pension age (98%) received it.
There are two State Pension systems in the UK: the ‘old’ State Pension and the ‘new’ State Pension.
The ‘old’ State Pension refers to the contributory state retirement pension system in place for people who reached State Pension age before 6 April 2016.
The old State Pension has two tiers:
- The basic State Pension (BSP) – a contributory flat-rate benefit to which people built entitlement on the basis of their National Insurance (NI) record. The full amount is £169.50 a week in 2024/25.
- The additional State Pension – this depended on the earnings or deemed earnings during a person’s working life since 1978. People built up entitlement through the State Earnings Related Pension Scheme (SERPS) between 1978 and 2002, and the State Second Pension (S2P) from 2002 onwards. It was possible to contract out into a private pension scheme that met set requirements, in return for which the employee (and their employer) paid a lower rate of NI.
The new State Pension was introduced by the coalition government by the Pensions Act 2014. It applies to people who reached State Pension age on or after 6 April 2016. The full rate of the new State Pension in 2024/25 is £221.20 a week.
More on the State Pension, as well as occupational and personal pension can be found in the Library’s briefing Pensions in the UK.
Means-tested supportPension Credit is a means-tested benefit for people of State Pension age and over. Pension Credit can have two elements:
- Guarantee Credit – which tops up incomes to a set amount known as the “appropriate amount”. This is the amount the government assesses a person or couple needs to live on each week based on their circumstances. It is made up of the Standard Minimum Guarantee (currently £218.15 for a single person and £332.95 for couples) alongside additional amounts for severe disability, caring responsibilities and liability for certain housing costs. A person is entitled to this element of Pension Credit when their income is below their “appropriate amount”.
- Savings Credit – which aims to reward people with modest levels of “qualifying income” (including state, occupational and personal pensions) above a threshold, up to a maximum (in 2024/25 this is £17.01 a week for single claimants and £19.04 a week for claimants who have a partner). For such people, it is possible to get some Savings Credit even if they do not get the Guarantee Credit part of Pension Credit.
For people who reached State Pension age from 6 April 2016, the Savings Credit element is not available and they can only claim the Guarantee Credit element.
Pension Credit can help with a range of housing costs faced by people who own their own home. Where the claimant is a renter, housing costs for State Pension age claimants are generally covered by Housing Benefit, claimed and paid separately to Pension Credit. Housing Benefit is calculated based on the amount of rent owed, in addition to any services charged. The government intends to bring housing support into the Pension Credit system for new claimants from 2026, creating a new Pension Credit Housing Element.
Additionally, people of State Pension age on low incomes might be eligible to receive a reduction in the amount of council tax they have to pay. Council Tax Reduction schemes (CTRs) are available throughout the UK, but the rules around eligibility vary depending on where a claimant lives. In England, local authorities are responsible for delivering their own local council tax reduction schemes, although regulations stipulate that local councils must make reductions for certain classes of pensioners, including those who receive the Guarantee Credit part of Pension Credit, or pensioners who have a low income and savings below £16,000. For more information, see the Commons Library briefing, Council Tax Reduction Schemes.
Pension age disability and carer benefitsPeople over State Pension age may be eligible for non-means-tested benefits to help with the extra costs of a health condition or disability. These include Attendance Allowance (AA) or, if the person had a health condition/disability before they reached State Pension age, Personal Independence Payment (PIP) or Disability Living Allowance (DLA).
Unlike AA, both PIP and DLA have a mobility component for people who need help getting around.
Older carers may be able to claim Carer’s Allowance, but they cannot receive it in full if they are also getting a State Pension. Satisfying the care conditions can however give rise to the carer addition in Pension Credit.
Extra-costs disability benefits and carers’ benefits are devolved matters in Scotland.
Other financial supportOther help for people over State Pension age includes:
- Winter Fuel Payments, worth £200 or £300 per household depending on age, which are now limited to people getting Pension Credit or certain other means-tested benefits. In Northern Ireland, pensioner households no longer eligible for a Winter Fuel Payment will receive a one-off payment of £100 for winter 2024/2025. In Scotland, from 2025/26 onwards the Pension Age Winter Heating Payment will replace the Winter Fuel Payment. As in England and Wales, only those getting Pension Credit or means-tested benefits will receive the £200 or £300 rate. All other pensioner households in Scotland will receive £100.
- In England, Wales and Northern Ireland, Cold Weather Payments worth £25 a week are paid to households on Pension Credit during periods of very cold weather. In Scotland, the Winter Heating Payment – an annual payment not dependent on weather conditions – has replaced Cold Weather Payments. Pensioner households in Scotland getting Pension Credit received the Winter Heating Payment from December 2024.
- The Household Support Fund, which allows local authorities in England to provide discretionary support to those most in need of help with the cost of essentials, such as food, energy and water bills. £742 million has been allocated to English local authorities for the Household Support Fund for 2025/26, with additional funding for the devolved governments through the Barnett formula to use at their discretion.
- There are various schemes and concessions Pension Credit acts as a gateway to, including help with NHS costs, free TV licences for people aged 75 and over, and the Warm Home Discount Scheme.
In July 2024 the government announced that, from winter 2024/2025, households in England and Wales will no longer be entitled to the Winter Fuel Payment unless they receive Pension Credit or certain other means-tested benefits. The measure is expected to save around £1.3 billion in 2024/25 and £1.5 billion in subsequent years.
Further information can be found in the Library’s briefing on changes to Winter Fuel Payment eligibility rules.
Pension Credit take-upIn May 2024, 1.35 million households in Great Britain were receiving Pension Credit. However, significant numbers of pensioners who would be entitled to Pension Credit do not claim the benefit. The DWP estimates that in 2022/2023 up to 760,000 households who could be eligible did not take up Pension Credit, with an overall take-up rate of around 65%.
Concern about low take-up of Pension Credit has been a recurring theme ever since the benefit was introduced. It has received renewed attention after Pension Credit became the main benefit people of State Pension age could use to become eligible for Winter Fuel Payment from winter 2024/25. In August 2024 the DWP launched a “Pension Credit awareness drive” urging pensioners to check their eligibility for Pension Credit in order to secure Winter Fuel Payment.
For further information, see the Library briefing on Pension Credit – current issues and section 3.2 of the briefing on changes to Winter Fuel Payment eligibility rules.
Household Support FundIn response to questions about vulnerable pensioners no longer qualifying for the Winter Fuel payment, ministers have highlighted the Household Support Fund in England as a possible source of help for those struggling with the cost of living. The Household Support Fund is however intended to help all groups struggling to afford essentials, not just people over State Pension age.
Local authorities can proactively identify households who may benefit from help from the Household Support Fund, but it is not clear if any have sought to identify households struggling following the loss of the Winter Fuel Payment as a group to target support on. Local authorities must operate at least part of their scheme on an application basis, but this requires people themselves to come forward to ask for support.
Work and Pensions Committee inquiryThe Work and Pensions Committee has launched an inquiry into Pensioner Poverty: challenges and mitigations. The Committee is looking at the state of pensioner poverty in the UK, including which groups are most affected and its health impacts. The inquiry is also looking at how the State Pension and other pension age benefits mitigate the risks of poverty, at how to boost Pension Credit, and at the part played by measures such as the Household Support Fund.
The Committee has held two oral evidence sessions so far, and the inquiry has received 46 written submissions.
Further reading- Commons Library briefing SN-07096, Poverty in the UK: statistics
- Commons Library briefing CBP-10139: Pensions in the UK
- Department for Work and Pensions submission to the Work and Pensions Committee inquiry Pensioner Poverty: challenges and mitigations, January 2025
- J Cribb, A Henry and H Karjalainen, How have pensioner incomes and poverty changed in recent years?, Institute for Fiscal Studies, 19 July 2024
- J Cribb, C Emmerson and H Karjalainen, Means-tested support for people approaching and beyond state pension age, Institute for Fiscal Studies, 11 December 2024