Working benefits claimants will have more cash in their pockets if they save towards their retirement after a reform of the welfare system, it has been claimed.
Under the existing system claimants - except those on tax credits - lose money if they contribute to a pension because it is classed as income.
Pensions minister Steve Webb said the Universal Credit, which replaces most benefits, will incentivise workers on housing or income-related benefits who chose to put into a pension or are caught up under automatic enrolment.
The change will affect workers earning more than around £107 a week and are eligible for support like housing benefit. Around one million households will be better off, according to the Department for Work and Pensions.
Mr Webb said: "More and more people are being automatically enrolled into workplace pensions, many for the first time, in the biggest change to the pensions system for over a century. Now we're giving people in work and on Universal Credit extra help to save for their retirement."