DWP merging two major benefits claimed by thousands – what you need to know

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Labour is pushing ahead with plans to merge two benefits claimed by millions in the UK.

Under plans by the Department for Work and Pensions (DWP), pension credit and housing benefit will soon be combined in a bid to make it easier for pensioners to claim the help that they are entitled to.

It is estimated that 880,000 eligible pensioners are currently missing out on pension credit. This is despite similar qualifying criteria for the two benefits, meaning being eligible for one will make a claimant highly likely to be eligible for the other.

The DWP has now made a major first step in enacting the plans as a contract worth up to £798,450 has been awarded to IBM to “identify the best strategic solution” to bring together pension credit and housing benefit.

Pension credit is a benefit for pensioners whose weekly income is below a certain amount. It will top up their incomes up to £218.15 a week if they’re single or £332.95 jointly a week for partners.

The DWP describes pension credit as a “passport” benefit, opening the door to more financial help than just the top-up. This includes housing benefit, support with mortgages, a free TV licence and, most recently, the winter fuel payment.

Housing benefit can be applied for as part of a pension credit application, but it doesn’t have to be. Following the ongoing expansion of universal credit, it is largely only pensioners that can still apply for the benefit. It is designed to help pay the rent for those on low incomes.

The same can apply the other way, with around 120,000 pensioners in receipt of full housing benefit but not receiving the pension credit they are eligible for. As part of its latest awareness drive – following changes linking pension credit to the winter fuel payment – Labour recently wrote to many pensioners.

DWP minister Sir Stephen Timms told MPs in October that the joint administration of the two benefits will begin “as soon as operationally possible”.

The plan was first announced over a decade ago, in 2011, but were never pushed through by subsequent Conservative administrations. Labour’s push to move ahead with the merge marks a major first step.

Rachael Walker, policy and research director at Policy in Practice said: “Bringing pension credit and housing benefit for pensioners together streamlines the administration of two essential benefits.

“Beyond administrative savings, we hope the scoping of this merger examines how take up can be maximised as more than £2bn in pension credit and housing benefit goes unclaimed.

“Real emphasis is needed on proactive support for older claimants beyond pension credit and we welcome any moves to get people who need it the money they have a right to claim”

The DWP has been approached for comment.