Question about change in qualifying age for a couple claiming Pension Credit when as from 2013, both will need to be above pension age:

I am trying to work out how couples can avoid being caught by the new rules. Single man aged 62 who receives pension credit and is about to move in with woman aged 59, who is working full time on minimum wage but has bad health.  I assume he will loose pension credit, her tax credits will increase, they will get some housing benefit and she could apply for DLA, possible carer’s allowance for him.

My question is - in order to avoid being caught by the new rules, could she continue full time work now, but switch to part-time hours in early 2013, so that they qualify for pension credit before April 2013. (Her minimum wage part-time salary would reduce to below pension credit couples rate.)

Is there anything else to be aware of?

If she continued full time working but gave up work December 2013, would they still be caught by the pension credit age rules, or would it make any difference that he was over pension age when the rules were introduced?

Secondly, could I check this change is planned for April 2013 and not October 2013 - some other websites seem to have the later date in line with Universal Credit.

Thanks

This needs rather a long answer, more than is sensible to try to give in detail here.

Briefly, (as far as we know - which isn’t very far):

Pension Credit will have to be claimed before a cut-off date.  That’s been given, in passing, in a written answer as April 2012.  There would seem to be options to attach it to either
(a) the introduction of the national roll-out of UC in October 2013
(b) the introduction of it in UC pilot areas to April 2013
(c) the full ‘new claims all for UC’ in mid 2014
(d) the introduction of the New PC scheme with, kids housing etc. whenever that happens.

All of those dates have consequences in terms of the intervening periods and would seem to link irrevocably to the timing of the UC roll-out.  If UC goes out of schedule or is amended, for example by pulling bits of housing of it, that will have inevitable consequences on PC.

Given that there will be a date, at some time, what does that mean for mixed-age couples?

If one partner is over QASPC when the cut-off occurs, that’s it.  No PC until the younger person reaches QASPC (Rupert Murdoch is 80, his wife Wendi is 43 - they’ll qualify in 2035 on today’s pension age)

It is counter intuitive that this change occurs as part of a work-incentive based benefits system introduction.  Some people will be best advised to stop working in order to claim PC before the cut-off, especially if they’re several years below QASPC but only intend to work for a shorter time.  People who might be tempted to go back to work while they’re on PC should be cautious.  If they float off because of earnings they may not get back on.  People over QASPC can claim WTC now but they won’t be able to claim UC in future.

It’s a complex calculation for many people.  We’re about to release a new system that does these kinds of sums and it’s apparent that there are many people who need to do some assessments over a period.  For example, if you are currently working and claiming WTC while one is under QASPC then you would see an income drop if you stopped work but would get a higher PC figure than if you stopped work and moved to UC.  You need to assess the (period of time on UC at that income level) plus the (in-work income level for that period of time)  versus (the same period of time on PC).

For many people, who will carry on working past QASPC, the loss of the ability to claim WTC is a bad, bad thing.  It means that for many people they will become worse off on PC than they would have been if they could have claimed UC in the same circumstances.  Many people who carry on working will have a forecastable drop in income when they reach QASPC and move onto PC, rather than the increase that most people see today.

The final point to bear in mind with these effects is that, AFAIK, there’s no transitional protection for PC recipients so that people who fall off WTC onto PC have little protection.

Gareth

Thank you so much for your helpful reply and for taking the time to explain the changes. A lot to consider.

Nicola

Nicola Hersh - 07 June 2012 08:29 AM

Single man aged 62 who receives pension credit and is about to move in with woman aged 59, who is working full time on minimum wage but has bad health.  I assume he will loose pension credit, ....

Sorry, I forgot to mention this.

People already getting PC with younger partners won’t be moved off onto UC.  In this case it’s not clear cut yet.  It would seem reasonable, if he continues to claim, to treat it as a change of circumstances and amend the claim to a PC couple.  That may or may not be what the rules finally say; they may make this a new claim in which case they wouldn’t qualify after the cut-off date.

As she’s working over 30 hours then they may decide it’s better for her to claim so that WTC and UC in-work support continues to be payable.  They’ll need to do the sums taking into account how long she’ll carry on working and, sometimes, whether they’ll need higher incomes now and lower in future or vice-versa.

Section 64 of schedule 2 of the Welfare Reform Act 2012 amends section 4 the State Pension Credit Act to exclude anyone of Pension Credit age from making a claim to PC if they have a working age partner.  Now I’ve checked all ten of the commencement orders (last one 31/5/13, and it wasn’t brought into force when the Bill was given Royal Assent, or shortly after) and the latest version of the State Pension Credit Act and I can’t find any evidence of section 64 being in force yet.  Thus, at present, a person of Pension Credit age with a working age partner can still claim PC.  Have I missed anything?

No date yet AFAIK.  One recentish ‘clarification’ ( and well done for posting exactly on the anniversary of the last comment) is that a single person on PC who forms a couple with a younger person will move from PC to UC.