Pension benefits should be paid automatically, experts say, as billions of pounds of pension credit and housing support goes unclaimed each year.
Recent Government estimates suggest up to £2.5bn in pension credit alone is not being claimed by eligible households, while as much as £1.1bn in housing benefit for pensioners also goes unclaimed.
Industry figures said too many older people are missing out because they either do not realise they qualify for support or struggle with complex claims systems and paperwork.
Speaking at the Pensions Age spring conference in London last week, experts from various pension firms argued the UK should make greater use of existing government data to automatically identify pensioners who qualify for support.
What is being proposed
Dan McLaughlin, UK country head at Festina Finance, said the UK should move away from a “pull” system, where pensioners must apply for support themselves, towards a more automatic “push” model.
Under this approach, people could be automatically assessed for benefits such as pension credit or housing benefit using data already held by HMRC, local authorities and the Department for Work and Pensions (DWP).
Currently, the UK system relies on pensioners recognising they may be eligible for support and applying for it themselves.
Older people seeking help through schemes such as pension credit or housing benefit must submit an application to the DWP or their local authority, providing details about their income, savings, pensions, housing costs and household circumstances.
Officials then assess eligibility based on this information. Critics argue the process can be complex and difficult to navigate, contributing to many eligible pensioners missing out on support they are entitled to.
Pension credit is a means-tested benefit designed to top up the income of poorer pensioners to £238 for single retirees and £363.25 for couples.
Meanwhile, housing benefit helps low-income pensioners with rental costs. How much you get – whether it’s all or part of your rent – depends on how much you pay, your household income, where you live and household size.
Supporters said this could help reduce pensioner poverty, improve take-up and simplify the process for older people.
The idea was backed by speakers from Festina Finance, Heka Global and Barnett Waddingham.
What happens in other countries
In Denmark, pensioners are automatically assessed for some state support using centralised population and tax records, allowing authorities to calculate eligibility using data already held across government systems.
McLaughlin said the Danish model works because public databases are far more integrated than in Britain, with a single national identification system linking tax, income, address and social security information. This allows government agencies to share data more easily and reduces the need for pensioners to complete separate applications.
Several other Nordic countries, including Sweden and Norway, also use digitised public records and co-ordinated welfare systems to streamline benefit payments and improve take-up among older people.
By contrast, the UK pensions landscape is more fragmented, with information spread across thousands of private and public pension schemes as well as multiple government bodies including HMRC, local authorities and the DWP.
Supporters of reform argue this makes it harder to identify eligible pensioners automatically and creates barriers for older people trying to access support.
Other places that automatically assess who is eligible for benefits include Denmark, the Netherlands, Croatia and the Isle of Man.
Why experts think the UK should change
McLaughlin said pensioners are too often forced to repeatedly provide the same information to different public bodies.
He argued that technology should be doing more of the administrative work instead of relying on older people to navigate multiple systems themselves.
“It should not be the case that information that could be taken from another public body needs to be provided by the citizen rather than technology doing the heavy lifting,” he said.
Hattie Tales, head of UK pensions at Heka Global, said automation could have a major social impact by reconnecting pensioners with support they are entitled to but may not realise they can claim.
According to the Pensions Policy Institute, around £31.1bn in pension savings remains unclaimed because records become fragmented when people move jobs, relocate or fail to update providers.
Tales said: “We’re currently seeing a lost generation of savers who are entitled to support but are living in fuel or food poverty because of a paperwork mismatch.”
What is stopping it
Former pensions minister Sir Steve Webb said there were still major barriers to fully automating pension credit.
He explained that eligibility depends on household circumstances, including income, savings and whether someone lives with a partner. The government does not hold all of that information in real time.
Webb said this was particularly difficult for people with self-employment income, rental income or complex financial arrangements.
He also pointed to a previous government pilot, which launched when he was in the position, that tried using existing data to identify people who may qualify for pension credit.
The scheme struggled because departments did not hold enough information to reliably assess entitlement.
He said: “It’s certainly true that more can be done to drive up take-up of pension credit, notably integrating it with housing benefit.
“But there isn’t a silver bullet solution to this problem, simply because the government only holds a fraction of the information needed for a full assessment of pension credit.”
Could the system improve?
Despite the challenges, experts said there was still significant scope to improve take-up.
Webb pointed to plans to integrate pension credit and housing benefit claims for pensioners, which could reduce duplication and help more people access support.
McLaughlin also argued that investment in modern infrastructure and artificial intelligence could help create a more joined-up system over time.