Universal Credit and

mixed aged couples

AKA
The Toy Boy Tax for
Pensioners.

By Maggie Zolobajluk and Gail Ward.

January 2019
Back in the beginning of 2012 it came to light that the Tory Government was going to implement changes to
the regulations for mixed-aged couples. Personally affected as my partner and I are classed as a mixed aged
couple.

So here are the facts, financial implications and finally what exemptions we would like to introduce to
mitigate the losses the person who has reached Pension Credit age suffers.

Benefit payment amounts in this article refer to the year from April 2019/20

Pension Credit: Background information and terminology

Pension Credit is a benefit that tops up the (Old) State Pension to per week of £129.20per week to £167.25
for a single person and £255.25 for a couple if they do not have any other income e.g private pensions etc
that takes them above this level.

Pension credit is a means-tested benefit for older people. It consists of two parts and a client can claim either
or both depending on her/his circumstances. The two parts are:-

 a Guarantee Credit
 a Savings Credit which is only payable now to people who reached pension age before 6 April 2016.

The term Pension Credit in this article refers only to Pension Credit Guarantee Credit and not to
Savings Credit

The term PCqa refers to Pension Credit qualifying age

Regulations

The old rules stated that as soon as one person reached retirement age then their partner could be included
on that Pension Credit claim. This means that the younger member of the couple is included within the
Pension Credit claim because their partner is over the qualifying age.

The new rule being implemented on 15th May of this year 2019 states that where one person is of state
pension age and the other is still of working age the couple will not be allowed to claim Pension Credit and
will instead be forced to claim Universal Credit, which is worth less.

For example, in 2018/2019 the rate for a couple receiving Pension Credit is £1106.83 per month or £255.25
per week

In comparison the couple rate for Universal Credit, for a couple over 25, is £498.89 per month or
£115.13pw

The loss here is £607.19per month or £140per week.

These are the 8 questions I asked Steve Webb, then the Minister of State for Pensions on 20th October
2012 regarding the changes to this legislation. His answers to my questions and the implications of
these changes to mixed-aged couples when it comes in effect on 15th May 2019.

Question 1: What measure is the government going to put in place to ensure that the person of qualifying
age for pensionable age is not disproportionally affected compared to a single woman of the same age due to
the current non equal retirement pension dates of men and women?
Question 2: Will the Government ensure that no-one will have to wait to qualify for PC longer than the
difference in the mixed couple’s age?

In my case if I were single then I would receive full Pension Credit and related benefits in January 2014,
when I am 61 years 10months old.

As a mixed aged couple, with 3 years difference between us, if these changes to Pension Credit are enacted
we would not be eligible for Pension Credit for 7 years and related benefits until 2021, when I will be 69
years old and my partner 66. Which as you can see is only an age gap of 3years.

State Pension Qualifying/Pension Credit Qualifying date with 2yrs 11mths difference between ages.

Age of female age of Partner difference in age Waiting time to

pension qualifying age
born March Born January
1952) 1955

Mar 2014 62 yrs 58yrs 1 mth 2yrs 11 mths

Mar 2018 66yrs 63yrs 1 mth 2yrs 11 mths 3yrs 10mths

Mar 2121 69yrs 66yrs 1mth 2yrs 11mths 7yrs 9 mths

Steve Webb: “Your first two questions ask whether claimants may be disproportionately affected by the
changes for couples in Pension Credit, as a result of the difference in men’s and women’s State Pension age.
The State Pension Credit Act 2002 provides for the minimum qualifying age for the guarantee credit to
increase in line with the increase in women’s State Pension age

The qualifying age was aligned with women’s State Pension age to avoid inequalities between men and
women in line with European EU directive 79/7, which prohibits unequal treatment in mattes of social
security

Currently, men and women can claim their State Pension from different ages. However, under the Pensions
Act 1995, the State Pension age for women is being equalised with that for men. Under the Acct, women’s
State Pension age has already started to increase from 60 and; accordingly the age at which people can get
Pension Credit is also increasing

The qualifying age will also increase further as a result of the Pensions Act 2011. Under the Pensions Act
2011 women’s State Pension age will increase more quickly to 65 between April 2016 and November 2018.
State Pension Credit qualifying age will increase alongside these changes.

The decision to increase the Pension Credit qualifying age alongside the increase in women’s State Pension
age prevents inequalities and means that men do not have to wait until their State Pension age before they
can claim Pension Credit, therefore no one will have to wait longer to qualify for Pension Credit”.

Implications of these changes: Question 1 and 2

The difference between men and women’s State Pension ages equalised in November 2018. Meaning
that this four year wait no longer applied as I reached the age of 66 early 2018 and my partner reached
the age of 63. It is only since 2018 that the three year difference in our age kicks in. So now, until 2021, a
change in our circumstances can trigger a Universal Credit claim, with a financial loss for us of £140 per
week.
Question3: What Capital Limits will be used? (The amount of savings you can have and still claim benefits)

Steve Webb; “With regards to capital limits. I can confirm that the capital threshold for UC will be set at
£16,000. Single people or couples with joint capital in excess of this amount will not be entitled to Universal
Credit. Where capital between £6,000 and £16,000 is held, an assumed income of £1 weekly will be taken
into account for every £250, or part thereof, between these limits. For example, if a person/couple possesses
capital of £7,400, an assumed weekly income of £6 will be deducted from Universal Credit.”

Implications of this change: Question 3

Capital/Savings

Read more at: https://inews.co.uk/news/universal-credit-dwp-benefits-pensioners-younger-partners-mixed-

age-couples/
Savings are treated differently, There is no upper limit for savings for someone claiming PC, they can
have £10,000 of savings before they start to lose their PC. This charge is called Tariff Income and for PC
recipients for every additional £500 they have over the £10,000 their pension credit is reduced by £1 per
week.

For working aged recipients the upper limit for savings is £6000 and the tariff income (money deducted for
savings) is £1 for every £250

The upper savings limit for claiming UC is £16,000 so under UC any couple with over this amount will not
be able to claim UC at all

A pensioner with £15,850 of savings would, under Pension Credit be seen as having £6000 of savings
subject to a tariff income of £1 for every £500 which would reduce their benefit by £12 per week.

The impact of these changes mean that a couple would not be able to claim universal credit until their
savings dropped to £15,999.

They would be subject to a Tariff Income (charge) of £1 for every £250 over £6000, meaning that they
would lose up to £40per week as compared to PC where they would only see a deduction of £14 per week.

The reason for this difference is to compensate pensioners who have worked hard and saved as pensioners
are not expected to and no longer have any other income coming in.

Capital/Savings: Universal Credit, Housing credit and Council Tax Reduction schemes
As there is no capital limit for people who receive Pension Credit, Couples receiving PC qualify for the
full amount of their rent and Council Tax

Savings over £16,000 will exclude these couples from claiming Universal Credit, Housing Benefit and
Council Tax Reduction. These couples will have to draw on their retirement funds at an earlier stage and
younger people are more likely to feel building up savings is not worthwhile.

Therefore we would ask the government to use the Pension Credit capital/savings limits along with
the PC tariff income charges rather than working age restrictions.
Question 4: There are no work related sanctions for people above the qualifying age for Pension Credit in
the current system. If the younger partner is sanctioned, how is this going to affect the partner who has
reached Pension Credit Age?

Steve Webb: “Claimants who have reached the qualifying age for Pension Credit will not be subject to
work-related requirements. Where one member of couple is subject to work-related requirements and
receives a sanction then there UC award will be reduced by an amount equivalent to half of the UC standard
Allowance.”

Implications of this change: Question 4

In this policy area the Government said it would protect pensioners. However it appears they will not
receive this protection if they have a younger partner because they will also be redefined as working
age. This, I believe, is discriminatory as it treats pensioners with a Full State Pension differently to
those who have not been able to amass one, as the Full state pension if paid monthly at £559.86 or
£129.20per week takes these couples out of any UC payment unless they are in receipt of a carers
premium and or SDP, as the couples Standard allowance in UC is only £498.89 per month or
£115.12per week. Therefore there is nothing to sanction as sanctions can only be taken from their
Standard Allowance.

Sanctions will apply only to those who are the poorest pensioners, whose with a State Pension below
the Universal Credit Standard Allowance. e.g State pension of £394.30per month or £91.00 per week,
gives them a Standard Allowance of £104.59per month or £24.13per week. Meaning that they can be
sanctioned, as they are in receipt of partial payment of UC Standard Allowance.

Their Standard Allowance of £104.59per month or £24.11pw can be sanctioned at 50% (see below)
which reduces their income by £52.30per month, or £12.06 leaving them with a weekly total of £91. +
£12.06 = £103.06 for both people to live on per week.

The person who has reached PCqa, although having no claimant commitment of their own is directly
affected by this ruling as they have not received a Full State Pension of £129.20 (Old State Pension).

“Step 3: If necessary, adjust the amount produced by step 2 so that it does not exceed—

(a) the amount of the standard allowance applicable to the award; or

(b)in the case of a joint claim where a determination under section 26 or 27 of the Act applies only in
relation to one claimant, half the amount of that standard allowance.”

http://www.legislation.gov.uk/uksi/2013/376/regulation/110

“Sanctions reductions are applied after taking earnings and unearned income into account.

If there is insufficient Universal Credit remaining after this to take the full sanction amount, the
sanction reduces the award to nil and is treated as having been made in full.

You will remain entitled to Universal Credit and will therefore maintain access to ‘passported’ benefits
such as free prescriptions.”

https://www.gov.uk/government/publications/universal-credit-and-you/universal-credit-and-you-
a#sanctions Ref 9.9 Reduction of sanctions from Universal Credit Updated 19th December 2018.
Question 5: Is the state pension paid to the qualifying person going to be treated as income, paid to them
and then deducted as income, as is the case for all other means tested benefits?

Steve Webb: “If State Pension is in payment then the amount of the State Pension in payment will be
deducted in full when calculating an award of UC. I should also explain that if a person is entitled to State
Pension but has chosen to defer claiming it, the value of the deferred pension will be taken into account
when calculating an award of UC”

Implications of this change: Question 5

Treating the state pension as income means that those with a full state pension, paid to them by the
government for doing the right thing and paying into the system all their working lives will mean that
they will not receive any standard allowance, having to claim UC to receive their rent (housing costs )

Deferring Pension:

Some couples, where one has reached PC age and decided to continue working for a couple of years,
deferring their pension using information that was available at the time may find that in the future they
then would not be able to access PC due to not knowing the change in rules

Couples who might be tempted to go back to work after a period claiming PC would find that they
would not be able to reclaim PC and be worse off in the long term.

Question 6: As the Government is not taking this measure for financial reasons, but to ensure that people
under PC age are available for work, Is the Government considering a Pensioner Premium in Universal
Credit, If not what measures are the government putting in place to ensure that the partner who has qualified
for Pension Credit is no worse off under Universal Credit than Pension Credit?

Steve Webb: “It is important that all people of working age should be in work or seeking work before they
look to the State to provide financial support. The current benefit system allows someone of working age to
avoid looking for work on the basis that their partner is above Pension Credit qualifying age: we do not this
is right or fair.”

Implications of this change: Question 6

Additional Element: So no Pensioner Premium in UC

The Government has said that in the current spending period the changes could save up to £100 million and
over time this will increase as more mixed age couples claim Universal Credit rather than Pension Credit.
Given that the Minister made clear that the aim was to improve work incentives rather than to cut spending
we believe there is scope to use savings that will be made in order to provide an additional element within
Universal Credit where one partner is older. AGE UK

Premuims that the Government could introduce.

1. An 0ver 60’s premium for those claiming JobSeekers Allowance (JSA). as access to the job market
for the over 50’s is more difficult https://www.ageuk.org.uk/globalassets/age-uk/documents/reports-
and-publications/reports-and-briefings/active-
communities/rb_nov16_work_and_health_programme.pdf page 3
2. A premium for those in receipt of Employment and Support Allowance (ESA) regardless of the
group they have been placed in.
Question 7: Pension Credit is vastly under claimed, which would allow for some flexibility in the system to
ensure that the partner who has qualified for Pension Credit is no worse off under Universal Credit than
Pension Credit. Has the government any plans to utilize this unclaimed money for this purpose?

Steve Webb: “You asked whether the Government has any plans to ensure that the partner who has
qualified for Pension Credit is not worse-off under UC than PC by utilising unclaimed PC. With UC we
want o put in place a system that is simpler to understand and has at its heart a focus on work, which will
provide more help to those who are furthest from the labour market and have the greatest need.

However, we are also committed to ensuring that no-one will see a financial losses the point of introduction
of UC. Cash protection will be there for existing benefit recipients at the point of change.

In particular, I should make it clear that a couple in receipt of PC by virtue of only one member of the
couple being of Pension Credit qualifying age will not be required to transfer automatically over to UC
when it is introduced.

After Universal Credit is introduced couples with one partner under and one over the qualifying age make a
new claim for Pension Credit will be required to claim UC. Existing PC recipients where one member is
under the PC qualifying age will remain on PC unless their circumstances change and they are no longer
entitled to PC. Although this will directly affect older couples, the Government believes this is justified to
avoid people under State Pension age being supported through the benefit system without being subject to
the appropriate work-related conditionally”

Implications of this change: Question 7

The government’s current plan is that existing benefit claimants will be moved over to Universal Credit
from 2019 onwards. A small number will start to be moved from July 2019 but the main 'managed
migration' will take place from 2020 onwards and is currently due to be completed by December 2023.

However, anyone who has a change of circumstance before that point will be moved earlier via 'natural
migration'. This group of people will lose their right to transitional protection

A list of these changes that trigger a UC claim can be found here:

https://www.entitledto.co.uk/help/changes_that_trigger_Universal_Credit

A move out of your current Local Authority Area will trigger a claim for UC.

Many pensioners when they retire like to downsize or move out of urban areas - down to the coast etc..
Or move to be closer to their families without knowing that they could lose out on thousands of £’s by
doing so.
 Question 8: What measures have the government taken to comply with Directive 79/7/EC https://eur-
lex.europa.eu/legal-content/EN/TXT/?uri=LEGISSUM%3Ac10907 and European Convention of Human
Rights Article 8 and Article 14?

Steve Webb: |Finally in answer to the above, the Department is content that we have taken measures to
comply with Directive 79/7/EC and the European Convention on Human Rights.

My Response in 2019.

http://www.un.org/en/universal-declaration-human-rights/

Article 25.
(1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of
his family, including food, clothing, housing and medical care and necessary social services, and the right
to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of
livelihood in circumstances beyond his control.
(2) Motherhood and childhood are entitled to special care and assistance. All children, whether born in or
out of wedlock, shall enjoy the same social protection.

Article 22.
Everyone, as a member of society, has the right to social security and is entitled to realization,
through national effort and international co-operation and in accordance with the organization and
resources of each State, of the economic, social and cultural rights indispensable for his dignity and
the free development of his personality.

Other Issues

 Mixed-age couples with SDP excluded from both UC and pension credit?

The below article from Rightsnet discusses the point that “ mixed-age couples can’t claim pension
credit from 15 May 2019 but people in receipt of SDP can’t claim universal credit from 16 January
2019 - so what will mixed-age couples with SDP claim?”
https://www.rightsnet.org.uk/forums/viewthread/13966/#65360

 The State Pension is paid 4 weekly.

This means that pensioners could find themselves receiving two State Pension payments or ‘double State
Pension’ wages' in one Monthly Assessment Period and find themselves in a similar position to this January
2019 High Court ruling on 'double wages' in one Monthly Assessment Period

https://www.housingsystems.co.uk/News/Latest-News
Mixed aged couples and CTC:

What is the policy to provide support for a maximum of two children?

From 6 April 2017, a change was made to the way in which Child Tax Credit and Universal Credit awards
are calculated.
Claimants are no longer eligible for The child element of CTC for a third or later child born on or after 6
April 2017, unless they are covered by an exception.
An additional amount in UC for a third or subsequent child born on or after 6 April 2017, unless they are
covered by an exception.
The same eligibility will apply to future new claimants of UC regardless of the date of birth of any children.
there are four categories of exception to these rules where a child element or amount may be paid in respect
of a third or subsequent child or children. They apply to third or subsequent children who are
Additional children in a multiple birth where an extra amount will be payable for all children in a multiple
birth other than the first child;
ii. Adopted when they would otherwise be in Local Authority care;
iii. Living long term with friends or family and would otherwise be at risk of entering the care system, or
where a child (under 16) living with their parents or carers has a child of their own (until they are eligible to
make a separate claim in their own right
); or
iv. Likely to have been born as a result of non-consensual conception, which for this purpose includes rape
or where the claimant was in a controlling or coercive relationship with the child’s other biological parent at
the time of conception.

Changes to Housing Benefit eligibility from 15 May 2019

From 15 May 2019, if you’re in a couple you’ll only be eligible to start getting Housing Benefit if either:

 you and your partner have both reached State Pension age
 one of you has reached State Pension age and started claiming Housing Benefit or Pension Credit
(for you as a couple) before 15 May 2019
 If you’re not already getting Housing Benefit on 14 May 2019, you can backdate your claim. You
could still be eligible to get Housing Benefit.
 You can ask for your claim to be backdated to 14 May or before. You’ll need to apply by 13 August
2019 to do this.
 You can apply for Universal Credit instead if you’re still not eligible.
 If you already get Housing Benefit and you’re in a couple
 You’ll continue to get Housing Benefit after 15 May 2019. If your entitlement stops for any reason,
for example your circumstances change, you cannot start getting it again until you (or your partner)
are eligible under the new rules.
 If you already get Housing Benefit and you’re single
 From 15 May 2019, you’ll stop getting Housing Benefit if you start living with a partner who is
under State Pension age. You can start getting it again when your partner reaches State Pension age.

Bedroom Tax: Mixed aged couple DO NOT have to pay.

 If a claimant or her/his partner has reached the age to qualify for pension credit, s/he will be exempt
from the bedroom tax.
 https://www.legislation.gov.uk/uksi/2006/213/regulation/5

Benefits that you are now not eligible for under Universal Credit.
Loss Christmas Bonus £10 per year

Loss of Winter Fuel Payment:

If you were born on or before 5 November 1953 you could get between £100 and £300 to help you pay your
heating bills. This is known as a ‘Winter Fuel Payment’.

You usually get a Winter Fuel Payment automatically if you are eligible and you get the State Pension or
another social security benefit (not Housing Benefit, Council Tax Reduction, Child Benefit or Universal
Credit). : https://www.gov.uk/winter-fuel-payment

Benefits you can still claim but are reduced.

Health costs

Under Pension Credit are entitled to help with health costs, for example, travel costs to hospital.

Under Universal credit: Claimants may be entitled to help with health costs if:

You receive Universal Credit and had no earnings or net earnings of £435 or less during their most recent
assessment period*
You receive Universal Credit and have limited capability for work or limited capability for work related
activity or are responsible for a child, and had no earnings or net earnings of £935 or less during the most
recent assessment period

*It appears at time of publishing that only an Occupational Pension counts as earnings.