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Pension credits will be trouble-free, MPs told
By Nicholas Timmins, Financial Times
July 15, 2003
UK - The government's plans for a pension credit are "on
track", Andrew Smith, pensions secretary, said yesterday as he tried
to reassure MPs that it would not face the administrative foul-ups on
implementation that have plagued other tax credits.
The government was using a "tried and tested" computer
system and had adopted a new approach of phased implementation for big
projects heavily reliant on IT, he said. But the complexity of the credit
still left pressure groups for the elderly expressing concern that the
helplines would be swamped by people who were not eligible when mass
advertising for the credit started in September.
Richard Wilson, incomes policy officer for Help the Aged, said
ministers seemed to be "in the business of managing
expectations" by assuming that only three out of four eligible
households would have claimed by 2006.
Payment of the credit begins in October and Oliver Heald, the
Conservative pensions spokesman, said: "How can Andrew Smith claim
the pension credit is on track when a million pensioners will still be
missing out by 2006?"
Mr Smith stressed that the 73 per cent take-up for the credit was
simply a "planning assumption", adding: "I want to beat
However, Gordon Lishman, director-general of Age Concern, said the
figure was too low. "Targets must be more ambitious and increase year
on year," he said.
To guard against the problems of unanswered calls and late payment
that plagued both the working and child credits earlier this year, Mr
Smith said a fifth of pensioners were being written to ahead of the main
advertising campaign in September and 1.1m households were already ready
to be paid. In addition, claims could be backdated for a year to October
"It is a brave person who says nothing can go wrong with
large-scale IT systems," Mr Smith said, but "I am not
"Experience of roll-out of new systems shows that a big bang
approach that sees everyone trying to ring the same number in a very short
space of time increases the risk of breakdown. We are trying to phase the
The credit rewards people who have small private and occupational
pensions and earnings by allowing them to claim means-tested help higher
up the income scale at an initial cost of £2bn a year.
Average gains would be £400 a year, according to the department,
and awards would stand for up to five years, removing the stigma of weekly
Smith vigorously defended the credit against criticism that it would harm
incentives to save for old age. Those who wanted to scrap it would deprive
poorer pensioners with small savings of help, he said. The new credit, he
predicted, "will be popular and accepted" and the government saw
it as a "permanent part of the pension system".