1.5 million fail to claim £3,000 a year pension credit

Those eligible who fail to take up the cash are missing out on an average £56 a week or over £2,900 a year, it adds (see the Pension Credit guide).

The Government and elderly charities are urging all pensioners to check whether they are entitled to the free cash to avoid missing out on what could be vital funds (see the Benefits Check-Up guide).

Pensions Minister Steve Webb says: "Millions of people have already benefited from extra cash through pension credit, but we know there are many more people who are eligible and could do with this money and a claim can be made with one free phone call.

"I want to see all older people receiving the support they are entitled to. Sometimes people think they aren't entitled to this money, so they don't try to find out."

Minimum income guarantee

Pension credit is a benefit for most over 60s that guarantees a minimum income of £132.60 a week as a single person or £202.40 as a couple.

If you earn less, your income will be topped up to that sum.

If you have housing costs, caring responsibilities or are severely disabled you may be entitled to more.

While pension credit is for those with low incomes you may be eligible even if you have tens of thousands of pounds in savings. Your first £10,000 doesn't count as income after which it is assumed you earn £1 per £500 in interest.

Those over 65 can also earn additional pension credit if they have savings.

Michelle Mitchell, from charity Age UK, says: "Claiming pension credit can make a huge difference to someone's income and quality of life.

"We would urge any older person who is worried about money to contact the Pension Service to see if they're entitled to any extra money."

To find out if you are eligible call the Pension Service on 0800 99 1234.

Further reading/Key links

Boost income: Benefits Check-Up, Pension Credit, State Pension Boosting