State Pension  

Couples could lose £10k a year from pension credit changes

Couples could lose £10k a year from pension credit changes

A mixed-age couple could be £10,000 a year worse off due to changes introduced to pension credit, according to research.

In a briefing note published last week (May 16), the Pensions Policy Institute stated that for mixed age couples on a low income, the latest policy change could have serious effects, with income dropping as much as 45 per cent.

Pension credits used to be available to pensioners who reach state pension age regardless of the age of their partner.

But in January Guy Opperman, minister for Pensions and Financial Inclusion, announced that new pensioners whose partners are younger than the state retirement age of 65 could no longer claim a pension credit.

Under the new rules, which were introduced last week (May 15), pension age partners will be forced to claim working-age benefits alongside their younger partners instead.

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.

Mark Baker, senior policy researcher at PPI and author of the briefing note, said the DWP expects mixed age couples to claim universal credit instead of pension credit.

However, he noted the former was a "benefit designed with the sole aim of encouraging working age people to find and increase paid work, and was never intended for pensioners to claim."

He added: "As a result, mixed age couples receiving universal credit are very likely to be significantly worse off than those claiming pension credit."

Incomes for couples from the two benefits are very different - under pension credit, a couple would receive a minimum guarantee of £255.20 per week, compared with £115.13 under universal credit, the PPI stated.

However, the differences do not end there, as "pension credit can provide access to other sources of social security income that universal credit doesn’t," the think tank added.

For example, a mixed age couple on pension credit would expect to be ‘passported’ to other social security benefits, such as housing benefit and council tax benefit.

In both cases people who qualify for the minimum guarantee of pension credit are likely to receive a full rebate for both, whereas those on universal credit will typically only receive a partial reduction.

The government estimated to save £1.1bn between 2019 and 2024 from this change, which has been opposed by a group of MPs.

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