Many pensioners are missing out
Meanwhile, two in 10 of those older owners who do claim something are not receiving all they should and sacrificing £702 annually. Just Group, equity release specialists who commissioned the research among their customers, found the highest amount of extra income lost was £4,854 a year.
The pensioner, who lived in Durham, was failing to claim any benefit but was eligible for Council Tax Reduction and Pension Credit.
Claiming Pension Credit has now become more important to older people on low incomes as it is only those receiving this benefit who qualify for a free TV licence worth £157.50 a year.
Government estimates that £1.8bn of Pension Credit is unclaimed.
“Once again we have found meaningful sums which would make a massive difference to people’s lives are not being claimed,” said Stephen Lowe, of Just Group.
“It reflects the government’s own figures that show billions go unclaimed and raises serious questions about whether people in most need are able to navigate the complexities of the benefits system.
“Helping them to claim their full benefit entitlement reduces, and can even remove, the need to release equity at that time.
“This gives them extra income immediately and the peace of mind that leaving the maximum value tied up in their homes provides them with more flexibility to use that wealth for themselves later in retirement or to pass it on to loved ones.”
In total, more than half of those eligible for more were missing out on at least £500 a year and a quarter missing £1,000 a year or more.
Couples are less likely to take up their entitlements than single people and the over-75s are less likely to claim than younger pensioners.
Pension Credit has the highest take up rate of all the four key benefits with four out of five who are eligible claiming.
But those failing to claim are missing out on an average £2,656 extra income per year, the most of all the benefits.
The second element of Pension Credit – called Savings Pension Credit – has the lowest take-up rate among pensioners at just a third of those who are eligible.
Those failing to claim are missing out on £576 a year.
Council Tax Reduction is claimed by 47 per cent of those who are entitled to claim with an average shortfall of £796 a year.
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Mr Lowe said the findings once again raise questions about the support and guidance available to those struggling for income, particularly among homeowners.
“Our research last year found that 48 per cent of homeowners aged over-65 had never checked their entitlement to State benefits compared to just 14 per cent who are renting.
“It reinforces the message that benefits information is integral to retirement guidance and that those struggling for income should check if they are missing out.”
Comment by Sir Steve Webb
Millions of pensioners have seen their savings hit by ten years of ultra-low interest rates and by the 2020 stock market slump which hit the value of their investments.
This means that it is all the more important that they claim the financial help that is available to them.
But this latest research confirms that huge sums of money designed specifically to help pensioners on more modest incomes is going unclaimed.
This includes income top-up benefits such as pension credit but also help with council tax or rent, often available from a local authority.
There seem to be two main reasons why this money goes unclaimed.
The first is that the system can be so complex that it can be hard to know if you are entitled or not.
In particular, many people who own their own homes imagine that this excludes them from claiming benefits.
However this is not the case.
The value of the home you live in is generally ignored when you are assessed for benefits, so if you are on a low income you may still be entitled to an income top up or help with the council tax.
There are websites where you can check what you are entitled to or a local Citizens Advice should be able to help if you are not sure.
The second reason is that people sometimes feel uncomfortable about claiming income-related benefits.
It’s true that the process does involve answering questions about your income and savings, but it can all be done over the phone these days.
And the amounts involved often make it worth this relatively minor inconvenience.
Not only can you get a top-up to your regular income, but claiming something like pension credit can also trigger entitlement to other forms of help.
This includes a free TV licence if you are aged 75 or over and help with energy bills.
These benefits for pensioners have been designed to make life a bit easier for those on a tight budget.
Having paid into the system throughout your working life, I would urge you to claim what you are entitled to in retirement.
• Sir Steve Webb was a pensions minister in the coalition government and is now a partner at consultants LCP.