The DWP has made a rule change on its plans for new bank account checks that will come as a relief to pensioners already feeling hard hit by the removal of their Winter Fuel Payment (Image: GETTY)

DWP announces major rule change for state pensioners in new bank account checks

Fresh legislation to crack down on fraud is to be brought forward - with a new assurance given to people on a State Pension

by · Birmingham Live

State pensioners have been given new assurances over DWP bank account checks to look for signs of fraud. The Department for Work and Pensions is bringing forward a Fraud, Error and Debt Bill to stamp out fraud within the benefits system that has reached astronomical levels of almost £10 billion a year.

Earlier planned legislation to tackle benefit cheats as part of the Data Protection and Digital Information Bill did not get approved before the General Election and has been shelved. It would have enabled the government to ask banks to look for signs of fraud in all DWP payments including the State Pension.

All banks would have been required to look for amounts over the capital limits for means-tested benefits, including Pension Credit, and for overseas transactions that indicated a claimant was staying overseas longer than allowed. This would have detected "a very small number of cases" where people on the State Pension had retired overseas but were pretending to still be in the UK so they could get annual increases in their amount received.

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Annual uprating of the State Pension is only applied to those residing in the UK and some other countries, but not in many others such as Australia, Canada, New Zealand, India, Pakistan and Bangladesh where it remains frozen at the same level as when a person emigrated. However, this particular aspect of the bank checks has been dropped with the DWP saying it is focusing primarily on 'eligibility verification' through undeclared capital and income.

Work and Pensions Secretary Liz Kendall said in the new announcement on the fraud bill: "The Eligibility Verification measure will not give DWP access to any bank accounts, nor any information on how claimants spend their money. The proposed new power instead helps verify benefit eligibility, using very limited information from banks and financial institutions.

"A human being will always be involved in any investigations and any decisions taken afterwards that affect eligibility or benefit awards, as they do now. This measure will not be used on the State Pension."

The news will come as a relief to pensioners who may already feel targeted by cuts to their Winter Fuel Payment. The allowance is now being restricted to those on Pension Credit and some other means-tested benefits.

DWP statistics on fraud and error in the welfare system show that there were State Pension overpayments of £170 million in the financial year 2023-2024, a rise from the £100 million level the year before. These overpayments included £80 million of fraud, £20 million due to DWP administrative mistakes, and £70 million caused by claimant errors. There are also State Pension underpayments of £470 million where people are receiving less than they should be getting.

Within the top-up payment Pension Credit, there were overpayments of £520 million in 2023-2024, which the DWP describes as a "statistically significant" rise on the £330 million figure the previous year. This includes fraud of £210 million, plus £100 million due to DWP error and £210 that's down to claimant error.

The DWP said: "Under-declaration of financial assets and claimants remaining abroad for a longer period than is allowed remained the two main causes of overpayments and accounted for over £5 in every £10 overpaid on Pension Credit in the financial year ending 2024." But there has also been a big rise in the number of Pension Credit claimants failing to declare they are living with a partner, it said.

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