New pension credit restrictions expected to save £1.1bn

New restrictions on Pension Credit claims by mixed-aged couples are expected to save around £1.1bn over the next five years, according to government estimates published on Thursday.

Currently, couples can claim pension credit — or top-up payments for the poorest pensioners — if they are “mixed age”, or where one is over state pension age and one is not.

Changes, coming into force in May, will restrict Pension Credit payments to couples where both are over state pension age, currently 65 for men and women.

When the change was announced in January, some pension experts forecast the restriction would leave mixed-aged couples £7,000 a year worse off.

According to policy costings released on Thursday by the Department for Work and Pensions, the measure will save nearly £1.1bn over the next years starting with £45m in 2019/20, rising to £385m in 2023/24.

Around 195,000 mixed age couples are estimated to be affected over the period by the measure, which will only apply to new claims from May 15.

Detail on the size of expected savings from the restriction came two months after ministers were accused of “sneaking out” news of the change on the eve of a crucial Brexit vote in January.

“Given the very substantial savings involved for the government and the damaging impact this change will have on some household incomes, it is hardly surprising they didn’t want to draw attention to it,” said Tom McPhail, head of policy with Hargreaves Lansdown, the investment managers.

“It is perhaps telling the DWP has contextualised its announcement today by including in its statement data relating to the department’s total annual expenditure, which amounts to over £120bn a year. In that context, £1bn may seem like a small sum, nevertheless the impact on individuals and their household spending will amount to hundreds or even thousands of pounds a year and for some it could present real problems.”

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In announcing the changes in a written statement, Guy Opperman, under secretary of state for pensions and financial inclusion, said pension credit was designed to provide long-term support for pensioner households who were no longer economically active.

“It is not designed to support working-age claimants,” Mr Opperman wrote.

The reforms were originally approved by parliament in 2012. Last year, Mr Opperman said he would implement the change once universal credit was available nationally for new claims.



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