Universal Credit has been prominent in the news lately, whether it’s the Secretary of State for Work and Pensions Amber Rudd acknowledging that a rise in foodbank use may be linked to the highly troubled roll-out, or the much trailed announcement that a two-child limit will not be applied retrospectively. However, you could find yourself not having heard about another significant policy development, which will soon affect tens and potentially hundreds of thousands of older couples. On the evening of 14 January 2019, in a written ministerial statement given to the House of Commons at 7.20pm, and the day before the Brexit meaningful vote taking place, Pensions Minister Guy Opperman informed MPs that from 15 May 2019, mixed-age couples will both need to reach State Pension age in order to make a claim for Pension Credit. One cannot help arriving at a conclusion that the Department for Work and Pensions (DWP) were looking to bury something which they thought might generate some negative headlines.
A mixed-age couple is, as the name suggests, one in which one partner has reached State Pension age, whereas the other partner has not. Currently, a couple in this situation are able to choose whether to claim Pension Credit or Universal Credit. From a financial perspective, the choice is usually very straightforward – the standard Pension Credit rate for a couple is more than £7,000 a year more than equivalent amount under Universal Credit.
Currently, there are around 115,000 mixed-age couples claiming Pension Credit, Housing Benefit, or both. These couples will not be affected by this change initially, due to savings provisions. However, any break in these claims, even for a single day, could see entitlement lost completely and needing to reclaim would mean they would need to claim Universal Credit instead.
Further, from 15 May 2019, all new claims will have to be for Universal Credit, with both partners in the mixed-age couple being required to submit an online claim and manage an online account.1 The older partner will not be required to undertake work-related activity but the younger partner will be subject to full conditionality unless their work coach agrees to a relaxation.
Age UK has already been contacted by couples where the younger partner is providing care for the older partner and who are extremely concerned about both the financial loss and their ability to manage the work-seeking requirements whilst also maintaining care for their partner. Age UK has highlighted that this policy could produce the absurd situation where a single pensioner would be better off separating and living apart from their partner, due to the simple fact that Pension Credit for a single person pays more than Universal Credit does to a couple.
In response to this move, we’re aiming to undertake two interlocking activities. The first and most pressing is to try and highlight the change to couples who are potentially affected and encourage them to claim whilst they can. We know that underclaiming of Pension Credit is already a huge problem, with estimates of more than £3 billion not being paid each year. Anyone who does want to check whether they are entitled can use the Age UK benefit calculator which only takes about 10 minutes from start to finish.
Alongside this awareness raising, we’ll also be lobbying for the policy to be reversed entirely. We welcome Ms Rudd’s pledge to “tread cautiously,” when moving existing benefit claimants onto Universal Credit through its managed migration programme. However, given the well-publicised problems of implementation of Universal Credit already, it’s difficult to understand the motivation to suddenly and unexpectedly throw older mixed-age couples into the melting pot.
If the policy does go ahead, we’ll be pressing for consideration being given to higher personal allowances being payable for mixed-age couples, as already happens with the legacy benefits being replaced by Universal Credit. This would at least ameliorate some of the potential financial losses. And there’s a whole range of other more technical issues that do not appear to have been fully considered, which need clarification prior to implementation.
With State Pension age having now equalised between women and men, and then continuing to rise, to 66 years in 2020 and 67 years in 2028, it is inevitable that more and more couples are going to be affected by this change over time. The complete lack of public communications from DWP to date has worrying echoes of what happened with the WASPI women when pension ages were first increased and no-one wants to see a repeat of that situation.
To have your say on the #AgeGapTax, add your name to this Age UK petition.
1. Although note, due to Pension Credit and Housing Benefit for pensioners having up to 3-month’s backdating, the absolute last day for new claims is effectively 13 August 2019, provided the claimant can show they were entitled as of 14 May 2019.