Pensioners, more correctly the mixed-age couple will be hit by the bedroom tax. The mixed-age couple is where one has reached state pension qualifying age and the other has not.
Last week I put out a blog stating that mixed-age pensioners will be hit by the bedroom tax, not initially in April but from October when Universal Credit kicks in. I was wrong. They can be hit by the bedroom tax from April, yes in just 9 weeks time!
I am constantly surprised at the level of knowledge of the real experts in the field as the following two comments to my blog show. They reveal in summary:
- Pensioners can be hit by the bedroom tax in April
- Pensioners can be hit with 65% tax rates or 100% tax rates if they work
- Pensioners can and will be hit by the overall benefit cap
- Pensioners that work will lose universal benefits such as cold weather payments
- Mixed-age pensioner couples will receive less in benefits that a single pensioner £1714 per year less to be exact!
- Mixed-age pensioners may well see a higher divorce rate
- The coalition changes will see pensioners being poorer
- Universal Credit says that a mixed-age pensioner couple have lower needs than a single pensioner!! (No you couldn’t make it up could you!)
- “All in-work help will disappear for them at a time when pension age is rising and more people have to continue working into old age”
Read on and find out more about this welfare ‘reform’ – Yes you know that word ‘reform’ that means to improve or better…Ahem!
From Mousegran yesterday:
If those “mixed-age” households currently claiming Pension Credit were to lose their eligibility, however briefly, they would no longer be eligible for pension credit. For example, if the working-age partner were to find a month’s temporary work, they would have to claim Universal Credit, not Pension Credit, when that work came to an end. Therefore, the couple would be hit by the bedroom tax. On top of that, they would no longer receive such things as cold weather payments. Hardly an incentive to find work!
What’s more, some reports suggest that a pensioner with a working-age partner will actually receive less benefit than a single pensioner. It seems unfair that the pensioner in the couple should be penalised in this way. I fear that these changes will lead either to a surge in divorces, or to a considerable number of poor pensioners whose autumn years will be very bleak due to their having a younger partner who, for one reason or another, is unable to bring in a living wage.
From Gareth Morgan today
Just to clarify some of the points that Mousegran made, and to add a couple more.
“If those “mixed-age” households currently claiming Pension Credit were to lose their eligibility, however briefly, they would no longer be eligible for pension credit. For example, if the working-age partner were to find a month’s temporary work, they would have to claim Universal Credit, not Pension Credit, when that work came to an end.”
This will only be the case if they earn enough to lose entitlement to Pension Credit completely. This is possible because the earnings disregard in Pension Credit for Couples is only £10 so everything above that will reduce, and in due course, remove Pension Credit entitlement. See my comment below on earnings.
“…. some reports suggest that a pensioner with a working-age partner will actually receive less benefit than a single pensioner.”
Pension Credit Guarantee for a single person, the basic means-tested amount, will be £145.40 from April 2013. The couple rate for Job-Seekers Allowance will be £112.55. Those mixed-age couples who find themselves on working-age benefits will be worse off than the older person would be on their own.
Pensioners are going to face a peculiar situation when work is considered. Some of these people are going to be worse off than if they were on working age benefits when Universal Credit (UC) is introduced.
Mixed-age couples who are put onto UC and have some earnings will have a lower ‘needs’ calculation but will have a higher earnings disregard. Particularly where there is a disability or they have a dependent child this may be very much higher. They are also able to keep more of their earnings than under Pension Credit (PC) after the disregard; they keep 35p of every £1 while under PC they lose every penny. It’s possible that this will more than make up the difference. It won’t where there are no earnings.
Those who are not on UC but stay on PC may find out that they might have been better off on UC if they are working because of this earnings calculation as well, even though the basic rates are lower. This won’t be the case if they have no earnings.
There are other hits as well:
Mixed-age couples may be hit by the Overall Benefits Cap as well as the Bedroom Tax.
Pensioners can, at the moment, get help, if they work enough, from Working Tax Credit (WTC) as well as PC. WTC is the in-work benefit support scheme that will vanish when UC takes over the in-work benefit role. Pensioners will not, unless they have a younger partner, be able to claim UC so all in-work help will disappear for them at a time when pension age is rising and more people have to continue working into old age
There are some incredibly important points made above and some not so obvious ones. The 65% tax rate will surprise some as will the 100% tax rate and especially with the coalition saying a 50% tax rate discourages high earners. For more it brought back memories of a case many years ago when a young person had an effective tax rate of 123% (he lost £1.23 in benefit for every £1 he earned) and so bizarre impacts of welfare benefits are not new.
Yet it also means IDS and the coalition clearly haven’t rid the system of perversities and in fact have added more!
Perhaps the most significant is the fact that under Universal Credit, the great radical reform at the heart of the coalition welfare reforms, we see a mixed-age pensioner couple being deemed to have less need of benefit than a single pensioner AND that UC takes away universal benefits from pensioners. This is hugely important in political terms as Cameron has said he has guaranteed pensioners will not lose ANY universal benefits during this parliament. Yet this will happen as we can see above
Yesterday Cameron at PMQs said the bedroom tax was fair. Anyone think the older persons lobbies will disagree with him now? Yes me too and especially when his bedroom tax fairness argument said why should social tenants be better treated than the private tenant yet revealed the exact opposite – that we spend £2.2bn per year more on private tenants in Housing Benefit than we do on social tenants and revealed too that the private rented sector gets more in subsidy that social housing does.
That takes Joe Publics thinking about social housing being subsidised and completely reverses it. In attempting to support the bedroom tax as ‘fair’ Cameron has made the case for massive social housebuilding, the social housing model and regulation of the private rented sector – the 3 fundamental housing issues Tories always oppose and an argument that a rabid left-wing dinosaur pinko commie under the bed socialist could not have made more clear! And exposed that the bedroom tax is chronically unfair as Cameron’s argument is a bogus one!.
The last word should go to Gareth and his last sentence will resonate
“Pensioners will not, unless they have a younger partner, be able to claim UC so all in-work help will disappear for them at a time when pension age is rising and more people have to continue working into old age“