Are you in financial agony? Ask Paul Lewis, broadcaster and our financial agony uncle. Is there something you’ve always wanted to know but don’t understand? Do you need to know your rights in a situation? Have you been in a situation where you think you’ve been ripped off?
Paul can help. He can’t take on individual cases or try to force firms or the Government to be reasonable. But you can send all those questions about things that puzzle you involving money to Paul at paul.lewis@inews.co.uk and he will answer some of them in this column. Remember, it’s your column so get those questions coming in.
Dawn emailed:
I retired in February aged 66 and am a Waspi woman. My husband is on universal credit. When I was working, my wages were taken into account when he received universal credit. It meant a percentage was taken off what my husband received, but this was only small.
However, now I am not working, they are taking my pension into account for how much he receives – and taking off a much larger chunk than when I worked. We are now £600 short a month and struggling. I don’t understand why they class my pension as unearned income when I had to work to earn it? It’s totally unfair and unjust.
Paul replies:
So many people write to me with problems that arise from some deep unfairness of the tax and benefits system. Sadly, you are one of those.
You are just over state pension age of 66 but your husband is under it. That means you are what the Department for Work and Pensions (DWP) calls a “mixed age couple”.
Until recently a partner over state pension age could claim pension credit even if their younger partner was under pension age.
But in May 2019 the rules were changed for new claims, so that both partners must be over pension age. If they are not, the younger partner can only claim universal credit. So thousands of couples must wait, sometimes for years, before they can qualify for pension credit.
That matters because pension credit is a much higher benefit than universal credit. A couple over the age of 25 on universal credit gets a maximum income of £617.60 a month – which is £142.52 a week. But pension credit for a couple is more than double that – boosting their income to £332.95, a bonus of £190.43 a week just because both are pensioners.
This change saved the government a lot of money. At the time the government estimated it would affect 60,000 couples and save the Treasury £385m in that by 2023/24. That is an average loss per couple of £6,400 a year. Today that average loss will be higher.
But there is a second unfairness that cuts your income still further – the one you ask for help with. Universal credit is a means-tested benefit. So it is reduced if either partner has other income. Normally that reduction is £1 of the benefit for each £1 of other income.
But there is a special rule for wages. For each £1 of income from wages, universal credit is cut by 55p not £1. So if one partner brings home £400 a month then the benefit is reduced by £220 a month instead of the normal £400 cut.
While you worked, the money you earned at work reduced your husband’s universal credit at the rate of 55p for each £1 earned. But once you reached state pension age of 66 you stopped work and claimed your state pension to replace your wages.
You had already had to wait some years after you expected to get your pension because you are a Women Against State Pension Inequality (Waspi) woman. Born in the 1950s, you expected to reach pension age at 60 – until it was raised to 65 then 66 in 2020.
The great unfairness for you is that even if your state pension is about the same as your wages, you will be far worse off just because you have reached 66, stopped work, and claimed your pension, which reduces your husband’s universal credit by £1 for £1, instead of 55p per £1. You say this means you get £600 a month less.
You are right that you only get your state pension because you worked and paid national insurance contributions. But the 55 per cent taper only applies to actual wages, not the state pension or private pensions. I agree that it does seem very unfair that your income has fallen so much just because your wages have been replaced with a state pension.
There may be ways to boost your income or reduce your expenditure by checking you get all the help you are entitled to. A good place to start is the charity Independent Age – call 0800 319 6789 or visit its website independentage.org.
Or try turn2us.org.uk on 0808 802 2000. Both can work out what you may be entitled to.
For example, your local council may be able to help by cutting your council tax or giving you money from its Household Support Fund. Water, broadband, and energy suppliers may all offer reduced tariffs to low income households.
Of course, none of this will change the injustice you feel. That can only be removed by the new Government changing the mixed-age rule. It is always worth complaining to your MP to ask them to raise the problem with one of the new ministers in the Department of Work and Pensions.