Mixed-age couples could lose £10,000 in pension credit raid

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Stripping pension credits from tens of thousands of mixed-age couples could leave some more than £10,000 a year worse off, a think tank has warned.

The Pensions Policy Institute (PPI) analysed recent government reforms to pension credit and claims that some couples would see their incomes drop by 45% as a result of the changes.

Pension credit is a means-tested benefit to support retired people on low incomes. Under the old rules, a person over state pension age with a partner below that age could claim it. The reforms, which took effect on Wednesday, mean anyone reaching state pension age on or after May 15 cannot claim pension credit until their partner starts claiming too. Instead, they may be eligible for universal credit. State pension age is 65 years and four months for men and women.

If a pensioner reached state pension age before May 15, they have until August 13 to claim pension credit or they will also fall under the new system.

Of the 115,000 mixed-age couples on pension credit, 60,000 are set to be affected by the changes, according to the government, saving the Treasury an estimated £385m a year.

The PPI report said: “For mixed-age couples on a low income, this policy change could have serious effects. [They] are likely to be significantly worse off than those claiming pension credit.”

The institute said mixed-age couples are likely to lose out because universal credit has been frozen since 2016, whereas pension credit increases annually. There are other universal credit rules, such as the tapering of benefits for people with savings of £16,000 or more.

The PPI said that a mixed-age couple in a two-bedroom council flat, currently on pension credit, would receive £255.20 a week in credits, a £21-a-week council tax exemption and £150 a week in housing benefit: £426.20 a week in total.

Under universal credit, their weekly income drops to £233.43 a week, leaving them with a shortfall of £10,024 a year.

The Department for Work and Pensions said it believed the rules were fair: “We have updated online guidance and written to all eligible mixed-age couples to make them aware of the changes.”