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The pension credit rule change that harms couples

Paul Lewis / 21 February 2019

Calling all couples! Are you on a low income? Would you like a bit of extra money to boost your pension? Many don't claim pension credit, and the rule change on 15 May 2019 makes it more difficult.

Bag of money with the word Pension written on it next to a miniature graph with an arrow pointing upwards
Only half the couples who qualify for pension credit and could get extra money each week actually claim it

If you are a couple – married or not – on a low income, now is the time to think of claiming extra money to boost it. Only half of the couples who could get extra money each week actually claim it. And a major rule change on 15 May 2019 could mean that some couples no longer qualify.

Who can claim now?

The extra money is called pension credit. It is a means-tested benefit that tops up your low income to set amounts. For a couple that amount is currently £248.80 a week, but rises to £255.25 from 8 April. Pension credit will top up your income to that amount.

For couples where one partner reached state pension age before 6 April 2016 the amount can be more – up to an extra £13.55 a week. If you have savings of more than £10,000, then your pension credit will be reduced. Savings are assessed jointly.

For a couple to be eligible at the moment only one of them has to be over state pension age – currently around 65¼. So a person aged 70 with a partner aged 62, who have an income between them of less than £248.80 per week, can claim this help. However, the latest figures show that only half of the couples who could get this extra help actually claim it. These 360,000 couples are missing out on an average of £41 a week boost to their income.

If you think you might be in that position, claim now because from 15 May the rules change.

Mixed-age couples

From 15 May 2019 any couple claiming pension credit for the first time will be eligible only if both partners are over state pension age. So a couple where one is 70 and the other 62 would have to wait until the younger partner reached state pension age – which will be on their 66th birthday sometime in 2023 – by which time the older partner would be 74.

For example, John is 70 and his income is low – just £135 a week. He gets pension credit of £32.25 a week to top it up to £167.25, the rate of pension credit from April.

John has been getting friendly with Meg who is 62. In July this year Meg, who claims jobseeker’s allowance, decides to leave her rented flat and move in with John. The new rules will apply and they will not be able to claim pension credit because Meg is four years under state pension age. Worse, John will lose his pension credit as a single person – which he no longer is – and the couple will have to live just on his state pension of £135. That is £32.25 a week less than he was living on alone and Meg will no longer get her £73.10 a week jobseeker’s allowance, leaving them more than £100 worse off.

There is a working-age benefit called universal credit they could claim, but it assumes a working-age couple can live on £115.13 a week and John’s income is already more than that. John may also find that he gets less help with his council tax depending on where he lives.

The new rules will not apply to couples who already get pension credit as a couple before 15 May. Nor will they apply if the couple get the enhanced rates of housing benefit – to help with rent – before that date.

How much money could it save the Government?

The Department for Work and Pensions refuses to say how many older couples will be affected or how much this decision will cost them – or indeed how much money it will save the Government. Here are my estimates.

The average amount paid in pension credit to a couple where the older partner is exactly 65 was £99.08 a week in May 2018 and will be a little more from April. More than 13,000 couples are in that position and will all have claimed recently. The age difference between married couples is typically between three and four years. So we can hazard a guess that the annual loss to a typical couple will be around £5,300 – a total of £19,000 until the younger one reaches pension age. The saving to the Government would be around £70m in year one, rising to more than £200m a year after four years as new generations of couples fail to meet the rules. These are my estimates. When I get official figures I will publish them here.

Of course, the Government does not say it is making the change to save money. Rather it says, ‘It restores fairness by ensuring only people of pension age can access pension-age benefits’. But that will be little comfort to pensioners such as John who will be denied ‘pension-age benefits’ until he is 74.

Claim now

Anyone who thinks they can claim pension credit – singles who currently have an income below £163 a week or couples with a joint income below £248.80 a week – should claim now.

Altogether more than a million could claim but do not. Savings over £10,000 will reduce what you get. Couples should claim before 15 May to ensure they are not caught by the new mixed-age rules.

People on low incomes who are over pension age and are forming a relationship with someone under pension age should get on with it, move in together, and claim before 15 May!

More information

Go to Independent Age and search ‘pension credit’.

To claim pension credit by phone, call 0800 99 1234.

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The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.