Pensioners in the borough with partners of working age could now lose up to £7,000 a year in top-ups as a result of imminent rule changes that will require them to claim universal credit as a couple.
The changes announced on Monday by the Department for Work and Pensions mean that from May 15, new pensioners whose partners are younger than the state retirement age of 65 can no longer claim a means-tested top-up called pension credit, which is available to poorer pensioners.
Currently, ‘mixed age’ couples, where only one partner has reached the pension age of 65 while the other is younger, can claim pension credit if they wish because one of them is over state pension age.
Instead they will now be made to claim the much less generous universal credit alongside their younger partners.
The couple rate of universal credit is currently £114.81 a week compared with £255.25 for a couple receiving pension credit. This amounts to a potential loss of £7,320 a year.
In a statement released late yesterday, pensions minister Guy Opperman said: ‘Pension Credit is designed to provide long-term support for pensioner households who are no longer economically active. It is not designed to support working age claimants.
“This change will ensure that the same work incentives apply to the younger partner as apply to other people of the same age, and taxpayer support is directed where it is needed most.”
Age UK said pensioners may find themselves in the “absurd position” of being financially better off if they split up and live apart from their partner.
A single person who claims the top-up is eligible for £167.25 a week in pension credit, meaning that in theory a pensioner will be better off staying “solo” for benefit purposes rather than claiming with a partner.
Caroline Abrahams, charity director, said: “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.”
The pension credit change has been in place since the Welfare Reform Act 2012, but ministers put off its introduction until universal credit was fully rolled out. Last month universal credit moved into every Jobcentre Plus area of the UK.