Low income couples in which one partner is of working age and the other has reached Pension Credit Age could in future end up with an income of up to £100 a week less than those currently in an identical position, because of changes in the Welfare Reform Bill.
Under the proposed Universal Credit system, a pensioner could be better off living alone and receiving Pension Credit than receiving Universal Credit as part of a couple.
In the future couples, in which one partner is under Pension Credit age, will have to claim Universal Credit. The Government wants to ensure that the younger person has greater incentives to work and in certain situations couples in work could benefit from the changes.
However many will lose out. Unemployed people approaching pension age often find it hard to return to employment and those unable to work through sickness or through being a carer could also lose out.
Age Scotland has looked into the impact of the proposed reforms and found that older people with younger partners who receive the Universal Credit could lose other benefits related to Pension Credit, such as cold weather payments and the Warm Homes Discount, as well as local concessions.
Age Scotland Chief Executive David Manion said: “Pension Credit currently brings a couple’s income to just above the poverty line. One half of a couple being below Pension Credit age should not mean that their joint income drops and for those unable to work through sickness or caring for others there is no opportunity to supplement their partner’s income. Many of those nearing the State Pension Age can find it difficult to find work no matter how hard they try.
“We are appalled that there has been no consultation on such a major policy change and full details of the system are not yet available even though the Welfare Reform Bill has been considered by the House of Commons and is entering its last stages in the House of Lords. There are far too many questions that must be answered before this becomes law.”
There are approximately 9,000 couples in Scotland receiving Pension Credit in which one partner is aged below 60. While those already in receipt of Pension Credit will continue to be able to receive this, new claimants will have to claim Universal Credit instead. As well as lower benefit rates, the savings rules are much harsher.
Currently there is no savings limit for Pension Credit but in the future those with a low income, but with over £16,000 in savings, will not be entitled to Universal Credit and any savings over £6,000 will result in a steep withdrawal of support. This could result in the older partner having to spend their retirement savings so they will be in a position to support the younger partner.
Age Scotland believes it is essential that if couples have to claim Universal Credit in the future the benefit levels must reflect the fact that one partner is a pensioner. Otherwise, couples with very similar circumstances will receive very different support, simply because they claim before or after the introduction of Universal Credit.
As the implementation date for Universal Credit approaches, the revised policy could act as a disincentive for younger partners to seek employment, because should their partner cease being entitled to pension credit, they may not be able to claim it in the future under Universal Credit.