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Pensions: £400m going unclaimed as thousands unaware of little-known allowance

·4-min read
Many senior citizens aged 80 and above aren't aware they are eligible for a pension even if they haven't contributed to national insurance. Photo: Christopher Furlong/Getty Images
Many senior citizens aged 80 and above aren't aware they are eligible for a pension even if they haven't contributed to national insurance. Photo: Christopher Furlong/Getty Images

Thousands of the oldest and most vulnerable members of society may be missing out on much-needed pension payments because they don’t know about a little-known allowance, designed for the over-80s. Research by the consultancy firm LCP estimates that this unclaimed amount may total as much as £400m. So what is this pension, who is eligible for it and why are so many not claiming it?

What is the over-80s pension?

As the name suggests, the Over-80s pension (also known as the Category D State Pension) is a state pension for those aged 80 and above and, for the tax year 2021/2022, it is worth £82.45 a week. The Over-80s pension either pays you the full £82.45 a week or "tops up" the State Pension you already receive to this amount. Confusingly, the eligibility criteria for this pension is different from that of the ordinary State Pension, and this is part of the reason many are potentially missing out. The government automatically rolls anyone onto the Category D payment if they're already receiving a State Pension before the age of 80, but, if you’re not receiving a State Pension, you need to apply yourself.

Read more: How much money do I need to retire comfortably?

Who is eligible?

To be eligible for the Category D State Pension, you need to earn less than £82.45 a week from your State Pension (or receive no basic State Pension at all) and to have been resident in England, Scotland or Wales for at least 10 years out of 20 (this does not have to be 10 years in a row). This 20-year period must include the day before you turned 80 or any day after. Unlike the State Pension, the Category D State Pension isn’t based on National Insurance contributions so if you have lived abroad for a significant period of your life, this does not matter. Check out the government’s official website for more on these eligibility details.

How many people could claim?

It is difficult to estimate the number of people who could claim but aren’t, but LCP puts it at around 100,000. “One of the main challenges with this pension is that it is not widely publicised so people are missing out on it. If people aren’t aware of this pension, they won’t apply,” says Thomas Skinner, founder and financial planning director of Barnaby Cecil. The people who miss out are often those like British-born Margaret Bradshaw, who lived abroad for most of her working life, never paid NI and didn’t realise she was eligible when she turned 80. “There are many vulnerable people over the age of 80 and the government needs to do more to raise awareness and help these people claim – for example sending a letter with details of how and when to claim, like they do with the State Pension,” says Thomas Skinner. The DWP is unsure of how many are missing out but told us that, as of November 2020, 63,771 were receiving a Category D State Pension.

Watch: When should I start paying into a pension?

How to claim?

It is very easy to claim this pension and the earliest you can do it is three months before your 80th birthday. You can get a claim form from a pension centre or your local Job Centre Plus.

Can you get back payments?

If you find that you are eligible and have missed out as you are already over 80, the DWP told us that you can get back payments of up to 12 months. “As people are legally required to make a claim for the Category D uplift, the law limits the backdating to a period of 12 months and is a long-standing element of social security law,” a spokesman said. This makes it all the more important to check that elderly relatives are aware of this pension and help them to make a claim if they are not currently receiving the full amount.

Read more: Child Trust Fund: How to find your child's share of £9bn government money

What you need to do

Thomas Skinner says that when it comes to retirement you need to keep checking your plan: “Regulations around pensions change frequently, so it is important to keep abreast of these so you can ensure you are getting everything you are entitled to.”

If you need advice and help on managing your money or that of an elderly friend or relative, there are lots of services available, including AgeUK, Money Charity and MoneyHelper (previously known as the Pensions Advisory Service).

Watch: What is universal basic income?

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