Mixed-age couples ‘should get universal credit premium’, says former pensions minister
A “pensioner premium” should be offered to older people with younger partners who are now missing out on nearly £10,000 a year after a benefits rule change, according to a former pensions minister.
Steve Webb said a special universal credit top-up could ease poverty among older people, while a charity boss said it would “soften” the blow of the 2019 rule change that prevented pensioners with younger spouses receiving pension credit.
It comes after analysis by i showed that mixed-age couples – where one person is of state pension age and the other is not – are now missing out on up to £9,900 per year.
Age UK said some couples were in “real hardship” because they cannot get the benefit aimed at boosting the incomes of the poorest pensioners, and are instead forced to claim lower sums on universal credit.
Pension credit can top up a couple’s income to a maximum of £332.95 a week if both people are of state pension age. By comparison, mixed-age couples are only eligible for a maximum £617.60 a month – around £150 a week – on universal credit.
It means mixed-age couples are up to £9,902 worse off a year than they would have been under the previous arrangements when they could claim pension credit.
Mr Webb, the Liberal Democrat pensions minister in the coalition government, told i he thought it was “harsh” for the Government not to make any allowances for such couples, especially if the younger partner is too ill to work.
He said: “There is a chasm between benefits for those under and over pension age which is hard to justify on any rational basis.”
The pensions expert suggested that there was a simple way of helping the most vulnerable without reversing the 2019 pension credit rule change, which was aimed at encouraging younger partners to keep on working.
Mr Webb, now a partner at finance firm LCP, called for a new “pensioner premium” within the universal credit benefits system.
He suggested there should be a new, higher rate of universal credit for couples with one partner over the state pension age.
“If a couple has one partner over pension age who even the Government doesn’t think should be expected to go out to work, this could be reflected in a higher level of universal credit.
“This would reduce the cliff edge in benefit levels as people pass through pension age and would ease poverty amongst couples around retirement age where neither is able to work.”
Mr Webb did not want to specify particular sums, but said the pensioner premium on universal credit could be made less generous than the amounts available with pension credit. This would mean there was still a financial incentive for the younger partner to work.
Caroline Abrahams, charity director at Age UK, is keen to see both the Conservatives and Labour, if it wins power at the next election, commit to fully reversing the 2019 rule change and open up pension credit to mixed-aged couples once again.
But she backed Mr Webb’s idea as a compromise. “Age UK campaigned against the introduction of these rules which penalise pensioners financially for having a younger partner,” she said.
“While we were disappointed that the changes went ahead, it is not too late to do something about it, and introducing a pensioner premium into the universal credit system would be a good way to soften the impact.”
The 2019 rule change by the Department for Work and Pensions (DWP) stopped an estimated 60,000 mixed-age couples from being able to access pension credit. The Government estimated that the reform – aimed at providing better “work incentives” for younger partners of pensioners – would save them £385m a year by 2023/24.
The Liberal Democrats and SNP have said pension credit rules should be reviewed to open up access to mixed-aged couples once again.
Neither the Government nor the Labour Party responded directly to the call for a new pensioner premium within universal credit.
A DWP spokesperson said: “Pension Credit provides long-term support for pensioner households who are no longer economically active because of their age.
“This policy ensures that if someone is of working age in a couple, the law applies to them in the same way it does for other working age people – regardless of their partner being older, giving them the same incentives to work and save for retirement.”
