Martin Lewis issues urgent benefit warning as thousands stripped of £7k a year

MoneySavingExpert.com founder Martin Lewis has issued an urgent warning to viewers of Good Morning Britain about new rules affecting couples claiming benefits.

This week, thousands of couples with age caps stand to lose a fortune on retirement support under new Department for Work and Pensions (DWP) changes.

The new guidelines mean someone reaching state pension age with a partner of working age will no longer be able to make a new claim for pension-age benefits, such as pension credits.

According to charity Age UK, those who claim financial support could lose out on up to £35,000 in the time it takes for their younger partner to reach state pension age under the new rules that will be enforced from 15 May.

Martin said: “The deadline was this Wednesday 15 May, but you can still backdate a claim for three months, so in practice there’s time.

“The issue is that if you do it now you get pension credit, if you do it and don’t make the deadline you get universal credit – and in every case that pays less, in fact some may lose out on up to £7,000/year."

He added: “Pension credit is a means-tested benefit aimed at supporting retired people on low incomes and can be worth thousands of pounds a year – yet a staggering 1.3million don’t claim it.

"To qualify, you must live in England, Scotland or Wales, and have reached state pension age.”

“The quickest way to claim is to call the Pension Service on 0800 99 1234 and it will fill in the application form for you and remember you want to try to claim for pension credit under the backdating not universal credit.”

Who could lose out

One in three mixed-age couples will become ineligible for both Pension Credit and pension-age Housing Benefit – two schemes designed to support the very poorest of pensioners and help them stay above the poverty line.

"This change was voted on by Parliament in 2012 and means, for new claims from 15 May, only pensioners can claim Pension Credit. If one partner is of working age we believe it’s fair that the same incentives to work and save for retirement apply as they do for other people of the same age," a DWP spokeswoman said.

"We have updated online guidance and written to all eligible mixed age couples to make them aware of the changes, which won’t affect them unless their circumstances change."

Government figures suggest the average couple affected stands to lose £7,000 a year under the changes, however Age UK research shows that almost one in three couples have an age gap of five or more years, which could result on losses of up to £35,000 while waiting for the younger partner to reach the state pension age.

In fact, for more than one in 12 couples with an age gap of 10 years or more, the loss could be as much as £70,000 if their younger partner is unable to undertake paid work in the time before they retire – for example due to ill health or caring responsibilities.

Age UK said many of these claimants are the most vulnerable, often with health problems or caring responsibilities that leave them reliant on the income they currently receive.

It said pensioners should not be denied the benefits once they reach retirement age simply because they have a younger partner.

What's changing exactly?

Until now, couples could claim pension credits of £255.25 per week if one of them had reached the state pension age.

However from today, both partners will have to be at retirement age to apply for the benefit.

Age UK said the changes effectively mean some couples may find themselves in the "absurd position" of being financially better off if they split up and live apart – which could raise even more issues around funding for carers.

Still time to act now

The new rules kick in this week, however there's still time for many couples who are eligible for the benefits to apply for them.

If you're a pensioner living on a low income with a partner of working age, you should check now to see if you qualify for Pension Credit and/or Housing Benefit. If you do, put in a claim before the Government changes take effect.

The good news is that couples eligible before 15 May will still be able to make a backdated claim up to 13 August 2019.

Mixed-age couples with a partner under state pension age already in receipt of pension credit or pension-age housing benefit will be unaffected while they remain entitled to either benefit, the Government has said.

Caroline Abrahams, director at Age UK, said: "It’s not at all unusual for one partner to be older than the other so lots of older couples on low incomes could be affected by this policy change without even knowing it yet. There is no doubt in our minds that many unsuspecting pensioners will face a heavy financial penalty for having a younger partner and this will undoubtedly affect the health and wellbeing of many of those couples.

"Not everyone is able to carry on working until their State Pension age, not least because many of those in the most deprived areas in the UK are in ill health long before they can officially retire. We are deeply concerned that benefits designed to support exactly these types of people are being abolished without fully understanding the impact on older people’s lives.

"We urge the Government to look again at the implications for the poorest pensioners and reverse its decision.  In the meantime we’re urging any pensioner who thinks there is even the slightest chance that they could be entitled to Pension Credit and/or Housing Benefit to put in a claim  now  – it could make a huge difference, potentially boosting their income by tens of thousands of pounds over the next few years."

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