The government has revealed that 60,000 of the least well-off pensioners with partners of working age are set to lose thousands of pounds a year as a result of benefit changes designed to save £1bn over the next five years.
A rule change coming into force on 15 May means that pensioners who have partners under the state retirement age of 65 will no longer be able to claim for pension credit, a means-tested top-up for older people on very low incomes.
The change means pensioners claiming after that date must sign up to the much less generous universal credit, a move which will leave the couple potentially £7,000 a year worse off.
Caroline Abrahams, charity director at Age UK, called the move an “ill thought-out decision” that would potentially devastate the incomes of poorer older people.
Analysts say the scale of the losses faced by couples could put pressure on relationships, and may persuade them that they cannot afford to marry or move in together. Some may consider splitting up to try to avoid the loss.
The change, which was slipped out in January on the evening of a Brexit vote, was condemned by charities as a stealth cut which would drive up pensioner poverty, although at the time there were no details of how many people would be affected.
The Department for Work and Pensions (DWP) revealed in an analysis published on Thursday that the rule change will affect 15,000 couples this year, rising to 60,000 in 2023-24. Estimated savings will be £45m this year, rising to £385m by 2023-24, amounting to cumulative savings of £1.1bn.
As well as moving pensioners on to universal credit, a working-age benefit designed to incentivise work, the move means that affected mixed-age couples in social homes are likely to be be subject to the bedroom tax – a £14 a week average loss in rent support from which pensioners were previously exempt.
Tom Selby, senior analyst at financial services firm AJ Bell, said: “Tens of thousands of mixed-age couples are facing a £1bn hit as a result of the government’s pension credit raid. With pension credit worth up to £13,273 a year, versus £5,986 a year for universal credit, at the extreme those affected could be over £7,000 a year worse off.”
A DWP spokesperson said: “This change was voted on by parliament in 2012 and means, for new claims from 15 May, only pensioners can claim pension credit. If a person in the household is of working age we believe it’s fair that they should be in the same circumstances as other people of the same age, regardless of the age of their partner.”