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Couples braced for £7K hit after gov’t confirms pension credit changes

Mixed age couples will now have to wait until the younger partner reaches state pension age to receive pension credits.

Couples braced for £7K hit after gov’t confirms pension credit changes

Mixed-age couples will now have to wait until the younger partner reaches state pension age to receive pension credits meaning some could be £7,000 worse off.

Currently, when single people reach state pension age they move from working age benefits to pension age benefits, whereas couples can choose to make this transition when the older partner reaches this age.

The rules are now set to change so that the transition to pension benefits occurs when the younger partner reaches the state pension age.

In an announcement by the Department for Work and Pensions (DWP) earlier this week, it was confirmed the change will come into effect on 15 May 2019.

The change follows a vote in 2012 by parliament to ‘modernise the system’ and change the rule to make pension credit available when the younger partner reaches state pension age.

‘This will ensure the younger partner is in the same circumstances as other people of the same age, regardless of the age of their partner,’ the DWP said at the time.

However, 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 the change will be unaffected, remaining entitled to either benefit.

Steve Webb, director of policy at Royal London, told The Financial Times that as pension credits are usually higher than working age benefits, some older couples could become £7,000 worse off.

‘A difference of just one day in the timing of a claim could cost a couple over £7,000 in the following year, as well as putting pressure on the younger member of the couple to seek work.

‘Under the proposed rules, couples where one partner is over pension age and is not expected to seek work will get the same rate as a couple where both partners are under pension age and both are expected to seek work.’

Webb was critical of the fact that DWP had published a statement on the change amid the parliamentary vote on Brexit.

Steven Cameron, Aegon pensions director, said: ‘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.’

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