At 7:20pm on Monday night, under the cloak of everything going on with the Meaningful Vote debate, the Department for Work and Pensions sneaked out an announcement that the eligibility rules for couples wishing to claim Pension Credits would change from May 15th this year.

Under the current rules a couple can apply for Pension Credits once the older partner in the relationship reaches retirement age. The new rules mean that the couple would not be entitled to Pension Credits until both partners had reached retirement age.

Pension Credits are a benefit that tops up a pensioner’s income to a certain amount. In the case of a couple this amount (from April) will be £255.25 per week, meaning the couple would be guaranteed a minimum income of £13,273 per year.

Under the new rules if the couple require financial assistance they will have to apply for Universal Credit. However, the maximum monthly Universal Credit payment for a couple with no additional needs is only £498.89 per month which equates to £5986.68 per year.

In extreme circumstances, for instance where the older partner receives very little or no pension meaning that the couple only receive the full Universal Credit amount, the couple would be £7,286.32 per year worse off under the new rules.

Let’s look at a much more common scenario though where the older partner receives the full state pension, which from April will be £168.60 per week (£730.60 per month), and the younger partner who has not yet reached retirement age is not working and receives no income.

Since Universal Credit is reduced by 63 pence for every £1 earned (and yes the state pension is classed as earnings for this purpose by the DWP) this would mean the couple’s entitlement under Universal Credit would be reduced by £460.28 per month resulting in a monthly Universal Credit payment of just £38.61.

So we can work out this couple’s annual income like this:

  • Universal Credit: £38.61 x 12 = £463.32
  • State Pension: £730.60 x 12 = £8767.20
  • Total Annual Income: £463.32 + £8767.20 = £9,230.52

Therefore compared to the £13,273 this couple would have received under the current rules they will be £4,042.48 per year worse off under the new rules.

In addition the younger partner would also be subject to the standard Universal Credit job searching conditions.

This change of rules only apply to new claims for Pension Credits made on or after May 15th 2019 meaning that in most cases “mixed-age” couples already receiving Pension Credits won’t be affected. However, very worryingly, should their circumstances change meaning they are temporarily not entitled to Pension Credits (for example a temporary increase in income) then they would be subject to the new rules when reclaiming.

Mhairi Black, the SNP MP for Paisley and Renfrewshire South, called the changes “cruel and callous” and has applied for a Westminster Hall debate on the matter.

This change has actually been on the statute books since 2012 but is only being enacted now. The Pensions Minister at the time responsible for introducing it was Steve Webb (now Director of Policy at pensions firm Royal London) and even he was critical of the way the Government announced this saying “People who may be affected deserve to know about this change and not have it sneaked out on a day when ministers were no doubt hoping that everyone’s attention was directed somewhere else.”

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