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Older mixed age couples need to check their benefit entitlement now

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The government’s decision to change the benefit rules for mixed age couples will have massive implications for households where one person is over pension age and one under.

Currently couples can claim Pension Credit as long as one partner has reached pension age (65 at the moment, though this is gradually increasing).

However, the Welfare Reform Act that introduced Universal Credit changed the age criteria so that couples will only be able to claim Pension Credit when both have reached pension age. This change was not implemented when the Act was passed in 2012 but the government announced yesterday it will introduce the new rule from 15 May 2019.

The change means that all couples where one person is over 65 should check their benefit entitlement before 15 May. If they are entitled to Pension Credit and claim it before 15th May they won’t be affected by the change. But if they try to claim after the deadline they will be too late and will have to claim Universal Credit instead.

It’s vitally important any couple who can claim Pension Credit claim it now, and we know that 4 in 10 households who qualify fail to make a claim.

As well as all of the conditions attached to working-age benefits, the amounts available are very different. For working age couples the level of Universal Credit is £114.85 a week, as it has been for the past few years owing to the benefit freeze. In contrast the level of Pension Credit is £255.25 a week (from April 2019), up from a current £248.80.

So for a couple with no other income Pension Credit is worth over £140 a week - £7,280 a year - more than Universal Credit. The key point though is that the effect will last for as long as one of the couple remains under pension age, so if the younger person still has 10 years until they become pension age (i.e. they are now age 56) the total loss would be £72,800.

Finally, as well as Pension Credit, qualifying couples who fail to take up Pension Credit before 15th May will become affected by other working age benefit rules. So they could also be made worse off by the bedroom tax, which pension age claims are exempt from, and from changes to help with Council Tax.

The example below illustrates the effect for a couple in April 2019 where one is over pension age and receives a full state pension (£168.60 a week), they pay rent of £500 a month (in a two bed flat, one of which is considered spare for working age cases) and Band D Council Tax.

As shown, in this case the loss could be £700 a month, or £8,400 a year, and the loss will continue for as many years as there are left until the youngest person reaches pension age.

  Working age benefits / month Pension age benefits / month
State Pension for older partner £731.47 £731.47
Help with living costs Universal Credit
£197.43
Pension Credit
£374.62
Help with housing Housing Benefit
£500
Help with Council Tax Council Tax Support
£92.13
Council Tax Support
£114.88
Total per month £1021.03 £1720.97

 

We think around 50,000 low income couples could gain benefits worth up to £350 million a year.

Like most things benefit related it’s never straight forward working out how many people might be impacted by this change but we estimate it could be around 50,000 couples, based on the following two sources.

First, the government said on 29 Jan 2019 an estimated 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 [1]. This number is made up of those claiming Pension Credit only (34,000), Housing Benefit only (25,000) and both Pension Credit and Housing Benefit (55,000).

Second, the most recent DWP statistics on the take-up of Income-related benefits [2] says that 50% of those eligible for Pension Credit do not claim and 16% of those eligible for Housing Benefit do not claim. There is no figure for those claiming both benefits, but if we use a potential best case of 16% for this group we are able to estimate the following:

  Number households claiming [1] Estimated take-up [2] Number households eligible Number households not claiming
Pension Credit (PC) 34,000 50%  68,000 34,000
Housing Benefit (HB) 25,000 84% 29,762 4,762
Both PC and HB 55,000 84% 65,476 10,476
Total mixed age couples 115,000     49,238

 

If 50,000 extra couples were to take-up their entitlement, and they were each around £7,000 a year better off, that would mean an extra £350 million in benefits being paid out this year. And because couples who claim before 15 May are protected, these extra benefits will continue for many years to come.


Read the government's announcement on gov.uk

 

Sources:

[1] https://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Commons/2019-01-24/212389

[2] Central estimates in tables PC3 in Pension Credit: tables and HB1 Housing Benefit: tables https://www.gov.uk/government/statistics/income-related-benefits-estimates-of-take-up-financial-year-2016-to-2017

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