Pension Credit overpayments have surged to their highest recorded level, with £610 million lost to fraud and error in the 2024/2025 financial year. This staggering figure comes as the Department for Work and Pensions (DWP) gears up to enforce new fraud powers, including bank checks on claimants, to ensure accurate benefit payments.
Record Overpayments and Underpayments Revealed
According to the latest DWP report, 28 out of every 100 Pension Credit claims were overpaid, totalling £610 million—the highest level to date. Of this amount, £270 million was attributed to fraud, also a record high, while £240 million resulted from claimant errors and £100 million from official departmental mistakes.
Conversely, three in every 100 claims were underpaid, potentially depriving recipients of £70 million. The primary cause was official errors, particularly regarding additional elements owed, such as payments for severe disability.
New Fraud Powers and Bank Checks
The DWP is implementing the Public Authorities (Fraud Error and Recovery) Act 2025 Eligibility Verification Measure, which will require banks and financial institutions to provide data to verify claimant eligibility. This measure aims to identify incorrect payments and ensure recipients receive the full amount they are entitled to.
Labour MP Andrew Western, responding to a parliamentary question, stated: "The Department is taking action to reduce incorrectness in all benefits. The Eligibility Verification Measure requires banks to provide data that will enable the Department to check the accuracy of awards."
Case Reviews and Implementation Plans
Alongside bank checks, the DWP will introduce case reviews for Pension Credit to help ensure ongoing payment accuracy. The new fraud powers will initially focus on Universal Credit, Pension Credit, and Employment and Support Allowance, with a 'test and learn' approach to ensure proportional and effective use.
However, the state pension is explicitly excluded from these regulations. Concerns have been raised by MPs about potential "mass fishing" campaigns and banks becoming "an arm of the state." Western addressed these fears in the Commons, emphasising that human decision-makers will be involved throughout the verification process.
He assured: "We have been clear that this information does not imply any wrongdoing, and this measure simply provides a source of data that feeds into long-standing processes in the DWP, where layers of support and specialist staff already exist to support those who are vulnerable or have complex needs."
Common Causes of Overpayments
The report highlighted that the most frequent reasons for overpayments were claimants failing to declare financial assets and individuals staying abroad longer than permitted. These issues underscore the challenges in maintaining accurate benefit distribution.
Pension Credit, a vital support for low-income pensioners, continues to face significant financial leakage due to these errors and fraudulent activities. The DWP's upcoming measures aim to curb these losses and protect public funds while ensuring rightful claimants receive their due support.
