Government to save £1.1bn with changes to pension credit for mixed age couples

Looming changes to pension credit affecting mixed age couples are expected to produce a saving of nearly £1.1 billion over the next five years, figures released by the Department for Work and Pensions (DWP) show.

The changes will affect couples where one person is above, and the other is below, the minimum qualifying age for pension credit.

At present, couples can claim pension credit of £255.25 per week if only one of them has reached state pension age.

But in future people in such circumstances may only be able to claim less-generous universal credit payments.

Age UK has previously calculated the difference could add up to around £7,000 per year.

Under provisions enacted in the Welfare Reform Act 2012, couples will in future be able to access the pension age income-related benefits only when both partners have reached the qualifying age.

The Government recently confirmed the changes would be introduced from May 15 – and commentators pointed out the announcement was made while attention was focused on votes related to Brexit.

Mixed-age couples with a partner under state pension age already in receipt of pension credit at the point of change will be unaffected while they remain entitled to it, the Government has said.

The DWP’s figures show an estimated saving of £45 million in 2019/20, rising to £385 million in 2023/24.

Tom McPhail, head of policy at Hargreaves Lansdown, said: “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 £120 billion a year.

“In that context, £1 billion 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.”