State pension cut due for thousands in April
Could you experience a cut to your state pension income in April?
As many as 11,000 people could see a fall in their state pensions later this year when an element of the pension payment is removed.
The ‘adult dependency increase’ is abolished in April, and a new freedom of information request has revealed that approximately 11,000 pensioners will be worse off as a result.
Insurer Royal London wrote to the Department of Work and Pensions (DWP) to obtain the data which shows how many people receive adult dependency increase as part of their state pension, as of February last year.
The adult dependency increase is an extra payment on top of the state pension, made in respect of a financially dependent adult partner.
The payments were introduced when many households had the main income earner (typically a male) and a dependent wife.
Adult Dependency Increases bridged the gap between the man reaching State Pension Age and the wife reaching State Pension Age.
These additional payments were abolished for new recipients in 2010, as a result of the Pensions Act 2017. But pensioners already in receipt of adult dependency increase at the time continued to receive the payments.
According to Royal London, the cost of providing these adult dependency increases is £33m in the 2019/20 financial year. Based on 11,000 pensioners receiving the additional payment, it means a loss per person of £70 a week, or £3,500 a year.
Steve Webb, director of policy at Royal London, said:
Under the old state pension system, people claiming a retirement pension could get a significant extra amount for a spouse who was financially dependent upon them.
Although that addition was abolished for new claims in 2010, many people already in the system have continued to benefit. It will come as a nasty shock to thousands of people to see their state pension cut by up to £70 per week.
It seems penny-pinching of the government to take this money away when the addition is gradually working its way out of the system in any case. Losing over £3,500 per year over night will make a material difference to the standard of living of those who are affected.
When the adult dependency increase payments stop in April 2020, existing recipients may become eligible to apply for Pension Credit or Universal Credit.
Those affected by the change will receive a letter from the DWP.As many as 11,000 people could see their state pension cut later this year when an element of the pension payment is removed Click To Tweet