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Welfare Reform Act 2012

18 December 2012

Welfare Rights Reform

The Welfare Reform Act – how it affects older people

You may have heard about the Welfare Reform Act 2012, which became law in March 2012. The act introduces major changes to the benefits system people of working age but some of the changes will affect older people too.


Here are some of the main changes:


Universal Credit will be introduced


Universal credit will replace certain benefits for people of working age including


  • Income Support
  • Income related Jobseekers Allowance
  • Income related Employment and Support Allowance
  • Working Tax Credit and Child Tax Credit
  • Housing Benefit

Universal Credit will be introduced from October 2013. If you are over pension age, you may still be affected if :


  • your partner is under Pension Credit age, and you are over Pension Credit age. You will no longer be able to claim Pension Credit, your partner will have to claim Universal Credit instead. But is you are already claiming Pension Credit when the change comes in you won’t be affected (unless or until there is a break in your Pension Credit claim for some reason).
  • you have dependent children living with you. Child Tax Credit will be abolished and financial help will be provided on Universal Credit or Pension Credit.
  • you are working in a low paid job and over Pension Credit age. You will no longer be able to claim Working Tax Credit.

By Pension Credit age we mean the age at which you are eligible to claim Pension Credit. You don’t have to be actually claiming it. This age is gradually increasing at the same pace as women’s State Pension age.

Pension Credit is changing

  • Because Housing Benefit is being abolished Pension Credit will change, it will include a new housing credit to help towards rent. It is expected that this will come in for new claimants in October 2014 but is you are already receiving Housing Benefit you will be transferred to the new Pension Credit system between 2014 and 2017.
  • Because Child Tax credit is being abolished Pension Credit will include additional amounts if you have dependent children.
  • There may be a new savings limit for Pension Credit. There is currently no savings limit but anything over £10, 000 is subject to a tariff income. If one is introduced it will be for savings over £16, 000.
  • It will be easier for carers to claim the extra amount for carers in Pension Credit.

Personal Independence Payment (PIP) will be introduced and DLA for adults will be phased out. PIP will replace DLA for people of working age who are disabled.

Working age means below 65 but this age will rise as State Pension age rises. When someone receiving PIP reaches 65 they will be able to keep claiming it as long as they satisfy the criteria.

PIP will have 2 components called ‘mobility component’ and ‘daily living component.’ Each of these will have 2 rates of payment depending on the level of disability the claimant has.PIP will start to apply to some new claims from April 2013 and to all from June 2013. If you currently get DLA you may be reassessed for PIP. If you are under 65 reassessments will start from Autumn 2013. The Government has not yet decided whether to reassess people who are over 65 and getting DLA when PIP is introduced.

Council Tax benefit will be replaced with a new localised scheme

Council Tax will be abolished and replaced with local support in 2013/14. Councils in England will receive funding to help people pay council tax. Scotland and Wales will come up with their own local schemes. The Government has said that current and future pensioners should receive the same level of support under the new scheme as they receive now. Support for people of working age is likely to reduce.


Employment and Support Allowance will change

You can claim Employment and Support Allowance (ESA) if you are unable to work because of illness or disability. Contributory ESA used to be paid indefinitely but now it is only paid indefinitely to people with severe medical conditions (in the support group). Everyone else can only claim it for a year.

Help with social housing rents is changing
If you are under Pension Credit age and you rent a house in the social housing sector, you will get less help with your rent after April 2013 if you are considered to have more bedrooms than you need. As explained above, under Universal Credit you will be treated as “working age “ if you are a pensioner but have a younger partner so some pensioners may be affected by this in the future.

New benefits cap
If you are under Pension Credit age or you have a partner who is under Pension Credit age, there will be a limit on the total amount of benefits you can receive. It will be linked to the average earnings of a working household. It will be around £350 per week for single adults and £500 a week for couples and lone parents. The cap will not apply to you if you receive Disability Living Allowance , Working Tax Credit, ESA support component or War Widows Pension.The cap will start to be introduced from April 2013 through reductions in Housing Benefit.

If you are an older person and have any concerns or want more information about how these changes might affect you please contact Age UK Rotherham’s Advice and Information Service on 01709 835214 or call in at The One Stop Shop, Unit 15, Old Town Hall, Howard Street, Rotherham S60 1QX.