BRITAIN’S poorest pensioners have left as much as £1.5 billion in entitlements in government coffers by shunning means-tested state benefits.

Statistics released yesterday on the take-up of benefits available from the Department for Work and Pensions (DWP) showed that as few as 63 per cent of those eligible for a minimum-income guarantee, a means-tested benefit aimed at pensioners on low incomes, applied for the money.

The Government saved up to £6.2 billion in 2002-03 — the latest period for which figures are available — because people did not apply for the state benefits to which they were entitled.

The minimum-income guarantee, which was not liked by many pensioners because of its 40-page application form and 100 per cent tax on savings, was replaced by the Pension Credit, another means-tested benefit, in October 2003.

The credit has also been criticised for a low take-up rate. In response to this criticism the DWP has hired Nigel Richardson, a marketer previously with NPower, the utility, to help it to sell the benefit to pensioners.

Tom McPhail, head of pensions research at Hargreaves Lansdowne, the independent financial adviser, said that means testing carried a huge stigma for many elderly people.

“No one likes having their finances pored over to see if you qualify for some help from the state,” he said.

David Willetts, the Shadow Work and Pensions Secretary, said that the low take-up of both pension and council tax benefits by pensioners showed the “deep flaw in Labour’s obsession with means testing”.

He said: “They might look as if they’re gaining according to Gordon Brown’s computers but in real life they are not getting what they’re entitled to.”

But Malcolm Wicks, the Pensions Minister, insisted that the number of poor pensioners receiving help from the Government had improved since the introduction of the Pension Credit.

He said that 300,000 pensioners on the lowest incomes who had refused the minimum-income guarantee were now receiving benefits.

He denied that there were problems with the take-up rate for the credit, which guarantees a minimum weekly income of £105.45 to people over 60.

About 3.8 million pensioner households are entitled to claim the credit but only about two million do so.

Yesterday’s figures showed that take-up of the minimum-income guarantee was flat from 1997 to 2003. More than half of those who did not apply for the benefit were aged over 75 and two thirds lived in low-income households.

The total amount of the minimum-income guarantee that was unclaimed was £1.5 billion in 2002-03, after up to 960,000 people refused to claim the benefit, the DWP said.

Pensioners also snubbed council tax benefits. The DWP said that as few as 65 per cent of those eligible applied for the benefit, saving the Government up to £1.2 billion a year.

The DWP admitted that the number of pensioners who had applied for council tax benefits had fallen by up to 10 per cent since 1997.

Take-up of the Jobseeker’s Allowance was 55 per cent among those eligible for the benefit, the new figures found.

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