State Pension  

Govt to save £1.1bn on pension credits

Govt to save £1.1bn on pension credits

The government will save £1.1bn between 2019 and 2024 from the recent changes to pension credits.

The figures, published today (February 28) by the Department for Work and Pensions, update the previous numbers given to parliament by Guy Opperman, minister for pensions and financial inclusion, who said it would be £395m between 2019 and 2022.

A new policy on pension credits was announced in January which stated new pensioners whose partners were younger than the state retirement age of 65 could no longer claim a pension credit.

"Pension credit is designed to provide long-term support for pensioner households who are no longer economically active. It is not designed to support working age claimants," Mr Opperman said at the time.

Currently, some 115,000 couples are in receipt of either pension credit or pension age housing benefit where one partner has reached state pension age and the other has not.

Under the new rules, which will be introduced from May 15, pension age partners will be forced to claim working-age benefits alongside their younger partners.

When single people reach state pension age, they move from working-age benefits to pension age benefits.

Charity Age UK predicted the change would affect the poorest pensioners the hardest, with mixed-age couples potentially losing out on about £7,000 per year.

Tom Selby, senior analyst at AJ Bell, said: "While policymakers can reasonably argue this change has been in the offing since the Welfare Reform Act 2012, that will be little solace to those affected who face a potentially significant retirement income shortfall.

"Anyone who thinks they might be impacted should act now to claim pension credit while they still can."

Tom McPhail, head of policy at Hargreaves Lansdown, said given the "very substantial savings" involved for the government and the damaging impact this change would have on some household incomes, it was "hardly surprising they didn’t want to draw attention to it".

He added: "It is perhaps telling the DWP has contextualised its announcement today by including in its statement data relating to the department’s total annual expenditure, which amounts to over £120bn a year.

"In that context, £1bn may seem like a small sum, nevertheless the impact on individuals and their household spending will amount to hundreds or even thousands of pounds a year and for some it could present real problems."