Cut in maximum Savings Credit in April 2012

The government had said that they were going to freeze maximum SPC for four years but this year they’ve cut it instead.  As there doesn’t seem to have been any formal announcement about this, other than the figure being included, without special note, in the uprating statement in Hansard, I thought it was worth mentioning.

The reasoning behind this AFAIK is only found in the Commons’ Library note, where it says in the introduction:

The Pension Credit standard minimum guarantee is required to be increased at least in line with earnings; the relevant earnings benchmark rose by 2.8%. However, the Government has decided to raise the standard minimum guarantee by 3.9% instead, paying for this by reducing payments on the Pension Credit Savings Credit.

There is a little more detail inside:

Savings Credit
People aged 65 or over who have made some extra provision towards their retirement such as savings or an occupational pension may be entitled to receive Savings Credit if their income is more than the Savings Credit threshold.
The 2006 Pensions White Paper stated that from 2008-09 onwards the Savings Credit threshold would rise in line with earnings.
This year however, in order to fund the 3.9% increase in the minimum income guarantee in 2012-13 (see above), the Savings Credit threshold in Pension Credit has been increased by 8.4%. The single person’s threshold rises from £103.15 to £111.80, while the couple’s threshold rises from £164.55 to £178.35.
In addition to reducing the number of eligible claimants by making the threshold higher, the maximum amount payable through Savings Credit has been reduced – from £20.52 to £18.54 per week for a single person and from £27.09 to £23.73 per week for a couple. (The Government had previously announced in the 2010 Spending Review that the maximum awards would be frozen at the 2010-11 levels of £20.52 and £27.09 until 2014-15.4)

As raising the GPC by more than the earnings link is benefiting the poorer pensioners, I think that it’s reasonably fair but it’s spun of course that the GPC increase is generosity while there no mention of the SPC cut.  They’ve even announced the increase in the threshold figure as if it’s a good thing.

hi gareth -

increase in savings credit threshold announced in chancellor’s autumn statement -

here’s a link to rightsnet news story -

http://www.rightsnet.org.uk/news/story/most-working-age-and-disability-benefits-to-rise-by-5.2-per-cent-in-april-2/

and statement itself -

http://cdn.hm-treasury.gov.uk/autumn_statement.pdf

cheers ros

Yes, but there was no mention at all of the cut in maximum Savings Credit.