Future pensioners may be less fortunate, especially as Universal Credit takes effect. At present, the effective 'age' for benefit claims from couples is that of the elder of the two - thus a couple where one is above pension credit age and one below are both 'pensioners' for benefit purposes, eligible for higher allowances, exempt from many of the evils inflicted on those of working age; the hated 'Bedroom Tax' and cuts to Council Tax support that have seen thousands of working-age benefit claimants struggling with new housing costs and marched off to Court. They are also not required to prove incapacity, nor to demonstrate availability and active searching for work.
Universal credit turns this on its head, making the younger partner's age the effective one for the claim, with potentially expensive consequences. Income-based Jobseekers Allowance for a couple is £112.55 per week (Universal Credit is projected to be a similar sum), while Pension Credit is £222.05 - more than twice as much - and working-age benefits have a fixed capital limit, lower level of disregarded capital and a higher rate of tariff income for savings. Without taking account of the sharper contrast the capital rules might impose, over a year the difference between being a pensioner and a working-age claimant couple is £5694. An age gap of two years means a loss of £11,388 - an age gap of 20 years, potentially £113,880 at today's values. Though with working-age benefits increasing at no more than 1% while pension-age benefits follow inflation, in reality the gap will widen in real as well as actual terms. And with Council Tax support regulations set up to follow Universal Credit rules once it takes effect, and liability for Bedroom Tax too, the losses to the pensioner and the savings to the Exchequer continue to accumulate.
I often wonder if this measure was the brianchild of an embittered civil servant whose other half ran off with a younger partner!
Existing Pension Credit claimants are safe, pending a 'change of circumstances' that might bring them within the scope of the new regime, but there is a stealth cut already affecting some of them which an eagle-eyed colleague pointed out to me recently, concerning the Savings Credit element of Pension Credit. It's a fairly obscure little piece of the Social Security system, an add-on to Pension Credit intended to address the frequent complaint of many older people that they were being 'penalised' for saving for their old age, and could be no better off than a less thrifty contemporary.
Savings Credit addressed this by paying an additional amount to pensioners over 65 who had a modest amount of savings or income in excess of the basic state pension, to cushion the sharp edge between entitlement to Guarantee Credit and having a few pence too much for it. This very rough diagram, which is not to scale, explains the basic principle:
The weekly income a single pensioner needs in order to qualify has risen from £98.40 in 2010 to £115.30 today, but the maximum credit payable has fallen from £20.52 to £18.06. For a couple, the threshold has risen from £157.25 to £183.90 while the maximum credit has fallen from £27.09 to £22.89.
For a Government supposedly keen to encourage self-reliance, chipping away at this small amount of extra help available to older people who have budgeted to make modest extra provision for their retirement, but are still far from well-off, seems out of step with the rhetoric. And with the long winter evenings and inflation-busting fuel price rises now upon us, those few pounds of savings credit lost every week may prove to have dire consequences.
