While everyone was fixated on the drama unfolding in the House of Commons over Brexit, the Department for Work and Pensions (DWP) announced a cut to Universal Credit that could cost mixed-age couples thousands of pounds a year.
Currently, mixed-age couples transition to State Pension when the older partner reaches State Pension age. But changes first announced in 2012 mean this will now takes place when the younger partner reaches State Pension age.
But the government provided no fixed date for when this change would come into force. That was until MPs were preparing for Theresa May’s ‘meaningful vote’ on her Brexit deal, when the date 15th May 2019 was quitely “sneaked out” online.
Mixed-age couples with a partner under State Pension age already in receipt of Pension Credit or pension-age Housing Benefit at the point of change will be unaffected, but only as long as they remain entitled to either benefit.
Age UK has warned that the “substantial stealth cut” means that some mixed-aged couples could potentially find themselves losing out on around £7000 per year.
The charity says that many pensioners might find themselves in the “absurd position of being financially better off if they split up and live apart from their partner”.
This, they say, is because the pensioner partner will, in many cases, find themselves eligible for more money from their Pension Credit than they and their partner will get together from Universal Credit.
Commenting yesterday, Caroline Abrahams, Charity Director at Age UK, said: “You could be forgiven for missing this announcement, since the Government used the most low key mechanism possible, a Written Ministerial Statement, late afternoon on the day before today’s ‘meaningful vote’, to bury the bad news.
“And make no mistake, this is very bad news for everyone affected. It’s a substantial stealth cut – a couple claiming in the future could receive £140 less per week than an older mixed couple claiming before the change comes in.”
Age UK also says that although existing claimants will not be affected by the changes, if a mixed age couple temporarily loses their eligibility for Pension Credit they will be unable to reclaim it and will be forced to claim Universal Credit instead.
Caroline Abrahams added: “Last week the new Secretary of State at the DWP, the Rt Hon Amber Rudd MP, made a speech about the future of Universal Credit that was widely praised as thoughtful and compassionate.
“We are very disappointed that only a few days later, her Department has quietly announced a measure which will hit the older couples affected very hard, undoubtedly pushing more into poverty.
“It is by no means unusual for one partner to be slightly older than the other within relationships and the bigger the age gap between them, the more long-lasting the adverse impact on them will be because of this proposed change.
“That’s why this Government policy has been dubbed ‘the toy boy tax’ by some – but that’s not to trivialise the really serious impact it is likely to have on anyone unlucky enough to be subjected to it.
“For some, the impact will be truly devastating. The Government should think again.”
Former Pensions Minister Steve Webb, who is now Director of Policy at Royal London, said the DWP had intentionally “sneaked out” the announcement “on a day when ministers were no doubt hoping that everyone’s attention was directed somewhere else”.
“This change to the benefit rules means that some couples could lose thousands of pounds depending on whether their claim falls a day before or a day after the May deadline”, he added.
Steven Cameron, Pensions Director at Aegon, said: “Claims that some mixed age couples could be £7,000 a year worse off suggest very substantial differences in pension credit and housing benefit for those below and above state pension age.
“Whenever there’s a change to benefit entitlements, there can be those who feel they have lost out because they fall on the wrong side of a cut-off date. But sometimes changes are needed to ensure benefits are going to those in greatest need.
“This change will affect far fewer individuals than the increase in female state pension age.
“There, inadequate communication meant many thousands of women were surprised to find that because of their date of birth, they are having to wait up to 5 years longer before they can claim their state pension.”