A Department for Work and Pensions rule is preventing 60,000 individuals, who have a small enough income to claim Pension Credit and are over State Pension age, from receiving the benefit.
Pension Credit is considered a ‘gateway benefit’ as it not only supplements your pension with extra payments but also grants access to other benefits such as Winter Fuel Payments and a free TV licence.
It further provides eligibility for Housing Benefit, the Warm Home Discount Scheme, mortgage payment assistance, Council Tax discount, help with NHS prescriptions, among other benefits and discounts. However, thousands of people on low incomes – below £218 a week – are unable to avail it.
Since 2019, the rule stipulates that if you are part of a couple where one member is over State Pension age and the other under, you must claim Universal Credit as a couple instead of Pension Credit.
This rule has led to 60,000 people claiming Universal Credit in place of Pension Credit, thereby disqualifying them from some of the other support.
According to AgeUK, it is also more challenging to get Universal Credit backdated when you claim. Some individuals on Universal Credit can still qualify for Winter Fuel Payments.
Pension Credit is intended to offer financial aid to those who have reached State Pension age and have a low income. It helps raise their income to a minimum level and can also provide additional benefits.
There are two types of Pension Credit:
Guarantee Credit
- This ensures a minimum income level for those who have reached the State Pension age.
- If your income is below a certain threshold (for 2024, this is £201.05 per week for a single person and £306.85 for couples), the Guarantee Credit tops it up to that amount.
Savings Credit
- This is an additional payment for people who saved some money towards their retirement, such as through pensions or savings.
- Savings Credit is only available to those who reached State Pension age before 6 April 2016.
Pension Credit, a vital means-tested benefit aimed at supporting older individuals, must be actively applied for by those eligible. It’s calculated based on income, savings, and individual circumstances, and isn’t handed out automatically.
Meanwhile, Universal Credit has revamped the welfare landscape for low-income families and jobless individuals, amalgamating numerous previous benefits into one streamlined monthly payout designed to assist with daily expenses while incentivising employment and increased work hours, as the aid gradually reduces in line with rising earnings.
What Universal Credit Replaces:
It replaces six older means-tested benefits, commonly referred to as “legacy benefits”:
- Income-based Jobseeker’s Allowance (JSA)
- Income-related Employment and Support Allowance (ESA)
- Income Support
- Working Tax Credit
- Child Tax Credit
- Housing Benefit
This fundamental change in social security replaces six “legacy benefits” with a single scheme.
Eligibility:
You may be eligible for Universal Credit if you are:
- Aged 18 or over (in some cases, 16-17 year-olds can qualify)
- Under State Pension age
- On a low income or out of work
- Living in the UK
- Have savings below £16,000
How Universal Credit Works:
- Single Monthly Payment: It combines all previous benefits into one monthly payment, covering basic living costs, rent (if eligible), and additional amounts depending on your circumstances (such as if you have children or a disability).
- Tapering of Benefits: As you earn more through work, your Universal Credit reduces gradually, rather than stopping abruptly. The idea is to ensure that work always pays, making it financially worthwhile for claimants to find employment or increase their hours.
Understanding how Universal Credit operates is essential for potential claimants.
Components of Universal Credit:
- Standard Allowance: The basic amount everyone receives, depending on whether they are single or in a couple.
- Housing Costs: To help cover rent or mortgage payments.
- Childcare Costs: Available to those with children to help with the costs of childcare while working.
- Carer’s Element: For those providing care to a severely disabled person.
- Child Element: Additional support for those with children.
- Limited Capability for Work and Work-Related Activity (LCWRA): Additional amounts for individuals with health conditions or disabilities that affect their ability to work.
Payments and Adjustments:
- Universal Credit is paid monthly, and your entitlement is assessed based on your circumstances during each monthly “assessment period.”
- Your payments are adjusted depending on your income, savings, and any changes in circumstances, such as housing, childcare costs, or disabilities.
