Pensioners in new benefits fiasco

MILLIONS of elderly people face losing money because ministers are bungling the introduction of a pension benefit, it is being claimed.

The shambles threatens to be even worse than the recent child tax credit fiasco which left hundreds of thousands of families struggling financially because of unpaid claims.

The new means-tested pension credit is designed to provide a minimum income in old age above the basic State pension and give extra cash to those with modest incomes from savings.

Chancellor Gordon Brown has boasted that it will provide ' security and dignity in retirement' for all pensioners.

But many of the most vulnerable pensioners will be left counting every penny for months longer than necessary - unaware they are entitled to the credit from October 6. The credit will give a minimum weekly income of £102.10 to single pensioners and £155.80 to married couples.

Although pensioners have been able to make a claim since April, just 1.1m of the 4.1m eligible households have so far signed up for it, according to figures released by Work and Pensions Secretary Andrew Smith.

The Government is not planning to launch an advertising campaign until just weeks before the credit is introduced, raising the prospect that millions of pensioners will rush to apply at the last minute. However, ministers have admitted that the computers administering the system are 'decrepit', sparking fears that they will not be able to cope.

Telephone hotlines may also seize up, leaving worried pensioners unable to get through.

In an attempt to avoid chaos, the Government is trying to stagger claims. Just one in five pensioners will receive letters telling them about the credit before October and the aim is for a mere 2.8m households getting their money by the end of 2004, rising to 3m by 2006. That means more than 1m pensioners will still not have claimed the credit three years after its launch.

The Liberal Democrats estimate that 70,000 pensioners will die between October and July without ever receiving the money. Late claims made before the end of 2004 will be backdated, but it still leaves many without the much-needed cash and will hit those who claim after this date.

The Government hopes to have 1.8m households ready to receive the credit by October. But Steve Webb, Liberal Democrat pensions spokesman, said: 'The word complacency springs to mind. This is a complex system with huge potential to go wrong. They are clearly bungling its introduction.'

David Willetts, for the Conservatives, added: 'The Government is trying to deliver a smooth introduction of this system by not telling anyone about it so pensioners do not clog their systems by claiming.'

Gordon Lishman, director-general of Age Concern, said: 'The fact remains that even with 1.8m transferred by October, the cash still needs to reach the pockets of another 2m pensioner households. The Government's targets for take-up of the pension credit are far too low.

'Targets must be more ambitious and increase year on year, otherwise there is a danger that the Government will end up in credit and not pensioners.'