Proposals by the government to reform the social welfare and benefits system are predicted to have a negative impact on pensioners who have spouses who are still working. Critics warn that the new laws could make it so that couples are financially better off if they live apart, despite the Coalition’s promises to reward marriage through tax incentive.

The changes will put pensioners at a disadvantage for multiple reasons, chief among them the drop in access to the pension credit if pensioners live with a working-aged spouse.

Consequences

The new rules could affect the 100,000 couples who currently claim pension credit, which is a benefit that ensures a minimum level of income for low-income pensioners. Pensioners with working-aged spouses would be forced to forego pension credit in exchange for universal credit, which means a steep cut in income.

Charity Director of Age UK, Michelle Mitchell, has said that this is particularly punishing for pensioners who have unemployed spouses below the state pension age, because older employees are more likely to have a difficult time finding a job.

Mitchell argued that “just because one half of a couple is below pension credit age” does not mean that their income should drop. She went further to say that the changes are insensitive to couples who are unable to work through sickness or caring for others, as the working-aged partner has “no opportunity to supplement their partner’s income.”

Further arguments

The threat to pensioners goes further, as the government has announced its plans to raise the state pension age to 67 between 2026 and 2028, despite the fact that the age rises have already been sped up from the former Labour government’s timetable.

The result is that those from the ages of 44 to 51 will be force to work an extra year, making it even longer before pensioner couples can claim full pension credit.

In addition, the reforms will mean that people with savings of £16,000 or more will lose any right to claim pension credit at all. Those with more than £6,000 in savings will see their aid drastically reduced.

However, the government defends it reforms, particularly its move to bar pensioners with working-aged spouses from pension credit. The Department of Work and Pensions released a statement saying that “people of working age who can work, should be expected to do so,” and that it is “not right” for the existing system to allow younger partners to enjoy pensioners’ benefits.

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Comments

1. 

   Alex B

   posted on 03 February 2012

   It seems to me that anyone who has worked all their lives & saved a little (according to Government advice) for their retirement will simply be robbed (and that is the correct word) of those savings before they are given that to which they are entitled. I’m sorry but I really can’t go along with this argument that we were paying for the previous generation’s pensions and so have no entitlement to anything – in 1966, I signed up to work for the next 50 years and then be able to live on my pension.

   I even followed Government advice in the ’80′s & added to my state pension with a private pension which was supposed to allow me to retire at 50 on my full final salary – that turned out to be the subject of mis-selling but the basic pension pot has also itself been robbed 3 or 4 times now & so ends up being worth a few pounds a week..

   I once read that in Russia, before perestroika, when the Government needed funds it simply emptied everyone’s bank accounts to raise cash – that is exactly what is happening now in the UK but in a slightly less brutal and perhaps more subtle way – but happening it is.

   Regards – Alex.

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