Department for Work and Pensions postpones new nasty for poverty stricken pensioners until 2019

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The Department of Work and Pensions has put back harsh plans to change the rules for new claimants for pension credit from next June to sometime next year.

The decision not to implement savings that could lead to  tens of thousands of elderly people having to live on half the money paid out by pensioner credit is not motivated by a change of heart on a heartless measure.

It is because of incompetence and failure by the ministry itself to roll out another major benefit called universal credit – which replaces a whole series of benefits – on time. This was supposed to be nationwide by June this year. But the civil servants who planned it failed in their job – despite collecting bonuses worth £20,000 on top of six figure salaries for introducing the new benefit. You can read all about it in my blog last year here.

So now instead the benefit will not be rolled out across the country until the end of December 2018. The proposed timetable is here– and you can see which local area changes when.

Of course the department has not announced the delay to the new pension credit cuts until I contacted them to check the date. Rather like they forgot tell 3.9 million  women pensioners about the rise in the pension age until some 14 years later.

A spokesman told me:

“The timetable for the introduction of any policy changes will be determined by the roll out of universal credit – this change will not now be implemented this year.”

The measure as I reported earlier is particularly harsh if there is a big age difference between pensioner couples – with one say years younger than the other.

Previously the law said when the oldest person in a relationship reached pension age  they qualified for pension credit. Now it is being changed to the youngest person in the relationship reaching pension age. This means if there were a 10 year difference – the oldest person could get no pension credit payment until they were 76 – ten years after the raised retirement age. On person has told me of a 17 year difference – meaning one of them would wait until they were 83.

What is as shocking is the department’s disclosure to me on how the new system is planning to work. When it comes in they are proposing both people in a couple apply for universal credit when there is an age difference between the two- and only one is over 65. The change is devastating.

If you are on pension credit these are the rates (per week) for 2017 – 18 and the proposed rate for 2018-19

PENSION CREDIT
Standard minimum guarantee
single £159.35  rising to £163.00
couple £243.25   rising to £248.80
Additional amount for severe disability
single £62.45  rising to£64.30
couple (one qualifies) £62.45 rising to £64.30
couple (both qualify) £124.90 rising to  £28.60

But when you switch to Universal Credit these are the rates for 2018-19 per month:

Single claimant 25 and over £317.82
Joint claimants, either/both 25 and over £498.89

This means a couple instead of receiving £995.20 for 4 weeks would see their income halved to £498.89 a month until both of them were over, by then, 66.

Furthermore the younger person in the marriage will be subject to benefit sanctions if they fail to continually seek work. This would cut their benefit compared to pension credit by two thirds to just £313.82 a month.

Notice there are no new rates for universal credit for 2018-19 as the benefit is frozen unlike pensioner credit which rises in line with pensions. This in theory could mean the people deprived of pension credit could be forced to live on a frozen benefit for years and see their living standards fall every year.

The DWP is being generous enough to say they would not force a person over 65 to seek work and sanction them if they don’t succeed. Presumably even Mr Opperman, the pensions minister, would not want to be seen trying to force a 77 year old into a job while he or she waits for pension credit.

Frankly  this is an appalling situation and I hope Backto60 people take this up as well as demanding their pension and try and put pressure on MPs to tell the government not to go ahead next year. This is a real and sustained attack on the poorest pensioners in the country and ministers should be ashamed of thinking of implementing it.

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Bodies set up to protect 12 million pensioners are not doing their job [Quelle Surprise]

Governance bodies set up to protect 12 million pensioners are not doing their job, charity claims. Review into independent governance committees should be a ‘wake-up call’ for regulator, ShareAction says.

A network of independent governance committees, established to represent the interests of 12 million UK pensioners, is failing to do its job, research by a charity promoting responsible investing has revealed.

Back in 2015, the Financial Conduct Authority introduced regulation requiring contract-based pension providers to appoint independent governance committees, or IGCs, to act in the interest of pension-holders and to ensure they are getting the best possible value for money.

The FCA at the time said that the UK had an “ageing society” and that many people lacked money for their retirement. The regulator said that, in this context, IGCs should help ensure that workplace personal pension schemes deliver value for money for members. IGCs, it said, have the responsibility to raise any concerns with the provider’s board and, if need be, escalate those concerns to the FCA.

MPs call for urgent action over erupting pensions misselling scandal

It also introduced rules requiring IGCs to publish annual reports to increase transparency and encourage comparison between providers. But a study published on Saturday by ShareAction claims that many of those reports are “vague and offer only unsubstantiated claims that savers’ interests are being protected”.

“This research should be a major wake up call for the FCA, with its mandate to make markets work well so that consumers get a fair deal,” said Catherine Howarth, chief executive of ShareAction.

“IGCs were a good idea, but the FCA made the wrong call in abandoning indefinitely its promised review of their effectiveness,” she added.

When the FCA introduced the new rules, it said that it would conduct a review of their effectiveness in 2017, two years after implementation.

In 2016, the FCA said that it reviewed them jointly with the Department for Work and Pensions and that based on the conclusions it drew at the time, it said that it had decided to defer a further review planned for the following year.

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Ms Howarth on Saturday said that she hopes the latest study will prompt the FCA to “refocus attention on the interests of UK pension savers who remain vulnerable in a market characterised by consumer detriment and information asymmetry”.

In response to the study, the FCA said that it “remains focused on ensuring consumers are protected”.

“Through work we have already undertaken, we found that overall IGCs are acting in accordance with their terms of reference, by influencing, supporting and advancing the significant reduction in costs and charges that have been achieved,” a spokesperson for the FCA said.

The spokesperson also said that the FCA was in the process of carrying out a number of other pieces of work which impact IGCs.

“For example, we recently published a discussion paper on non-workplace pensions highlighting the role that IGCs play in workplace pension schemes, and asking for views on whether independent governance could play a role in delivering fair outcomes for non-workplace customers. We are also currently considering what form of rule changes may be appropriate to address the law commission’s 2017 proposals on pension funds and social investment,” the spokesperson said.

Shadow pensions minister Jack Dromey welcomed the report. “As highlighted in the report, members of contract-based schemes, and of all other defined contribution, bear all of the investment risk and all of the costs and charges but are not fully informed about the nature of these costs. Quite simply, those saving for their retirement are kept in the dark,” he said.

“We are also calling for the immediate resumption of the Financial Conduct Authority’s dropped review of IGCs and demand that providers, who are in the main asset managers, hand over full details of all fees and transactions voluntarily to their IGC,” he added.

The ShareAction report ranks the quality and transparency of the IGC reports of 16 of the largest UK pension providers. Aviva tops the table for the best report, followed by Legal & General, Standard Life, Scottish Widows and Royal London.

Old Mutual Wealth and BlackRock’s IGCs tie for bottom spot, behind those at ReAssure and Zurich.

A spokesperson for Old Mutual Wealth said that it was reviewing the recommendations within the report.

“The role of the Independent Governance Committee is vitally important to ensure we deliver value for money for savers in workplace defined contribution pensions. IGCs are in relatively early days and we welcome commentary on how the clarity and transparency of their reporting can be improved,” the spokesperson added.

A spokesperson for BlackRock said that its IGC annual report discloses “all relevant information to scheme members and policyholders in a transparent and straightforward manner”.

The spokesperson added that in addition to the annual report, BlackRock “continuously updates scheme members and policyholders about the service, performance and costs for their life savings on its website, which we would argue is a better benchmark for transparency than the methodology used by ShareAction”.

“We welcome efforts to promote transparency and accountability and have engaged with ShareAction on its methodology. Despite our engagement, ShareAction has chosen to solely focus on a single annual written communication in the report,” the spokesperson added.

In its review of the individual reports, ShareAction said that some of them made “vague, high-level statements on provider performance and did not back them up with detail or data”.

The charity said that it felt it would be “hard for a consumer or consumer body to understand from these reports whether scheme member interests were being protected by the IGCs, and if scheme members were getting value for money from the various providers”.

In some cases it said that it also felt that the criteria established by IGCs would not be capable of capturing potential problems that members might experience.

Generally, it concluded that both IGCs and policymakers are able to do more to protect the interests of pensions. Mostly IGCs seem to have made “a good start in holding providers to account on the value they are offering”, it said, but it added that “it is not currently clear if customers of any given provider are receiving competitive returns and paying fair charges”.

It said that the onus was now on the FCA to issue further guidance. The FCA, it urged, should set a specific definition of value for money and issue “clear, comprehensive guidance on how to assess it”.

“The widely varied standards of assessment and reporting demonstrated by IGCs show that a more standardised approach is required,” it said.

The research comes on the back of a report issued by the Work and Pensions Select Committee earlier in February calling for urgent action over what it describes as an erupting pensions mis-selling scandal affecting 2,600 British Steel Pension Scheme (BSPS) members.

The MPs said that as a result of bad advice offered to those savers, £1.1bn worth of pensions were moved out of the company’s “gold-plated” defined-benefit scheme into riskier funds with high management fees.

The MPs said that the particular circumstances surrounding the BSPS “created perfect conditions for vultures to take advantage,” but that similar bad advice on defined-benefit pension transfers may be affecting tens of thousands of people’s retirement funds in schemes across the whole of the UK.

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Benefits claimants in the hundreds of thousands are missing out on money they are entitled to

Benefits claimants in the hundreds of thousands are missing out on money they are entitled to – that’s all well and good, but as any one that has claimed benefits well knows: claiming what you are entitled to is is like trying to undo the Gordian knot and easier said than done, not to mention phoning them costs the earth, one call [I made] to the DWP cost nearly £9.00 and who can afford that? GN

Charities and financial institutions urge struggling Brits to check if they are owed financial support

It’s January. The local pub is doing a roaring trade in lime and soda but even that small outlay is too much for many of our abused bank accounts. We need all the help we can get. And yet millions of Britons are failing to claim the benefits they are full entitled to designed to make specific, financially stressful situations a little easier.

The latest figures suggest 300,000 unemployed or very low earners, for example, are missing out on support worth at least £73 a week. An investigation by the Resolution Foundation has found that those forgotten unemployed, or those on such low hours that they qualify for out-of-work support – described as  ‘on the margins of our labour market’ – are mostly older people and younger men. Individuals are able to earn up to £80 a week and still claim Jobseekers Allowance, or £116 a week under Universal Credit.

Members of this group are missing out on at least £73.10 a week (the current value of Jobseekers Allowance/standard Universal Credit allowance for those aged 25 and over). However, they could potentially be missing out on far more if they are also entitled to passported benefits such as maternity grants, energy discounts and free school meals.

David Finch, Senior Economic Analyst at the think tank, said: “Over the last twenty years, a growing number of unemployed people are not claiming unemployment benefits. “Policy makers have generally been pretty relaxed about this gap, assuming that is largely due to people finding new work very quickly, or having other sources of financial support at home.”

The report calls on the government to do more to boost benefit take-up by those in need of support, arguing that the ongoing roll-out of Universal Credit provides an opportunity to refocus on those at the margins of the labour market.

But the benefits gap isn’t restricted to those looking for work.

This week, a Freedom of Information request to the Department for Work and Pensions has found that a scheme designed to help carers of disabled people build better state pension entitlement has failed to reach 97% of its target group. Just 3,524 people claimed the national insurance credit in 2016/17, compared with a DWP estimate when the scheme was introduced that 160,000 carers could benefit.

Royal London, which submitted the request, and charity Carers UK are now calling for a more proactive approach from government to make sure that carers take up these valuable rights. Royal London estimates that each year of credits would add £237 per year to a carer’s state pension, or over £4,700 over the course of a typical twenty year retirement.  If, as estimated, more than 155,000 carers a year are missing out, that’s a total loss of more than £700m.

In 2010 the government introduced a new system of National Insurance credits to help bridge gaps in National Insurance records. It was targeted on carers who were spending at least 20 hours caring, affecting their ability to earn enough to pay National Insurance, but who were not entitled to the Carers Allowance for those doing 35 hours per week of caring, and which brings automatic credits for National Insurance.

“Caring for more than twenty hours per week has a big impact on someone’s ability to hold down a job and pay National Insurance Contributions,” says Emily Holzhausen OBE, Director of Policy and Public Affairs, Carers UK.

“The carer’s credit is a good scheme but it needs much more effective publicity.  Caring often impacts negatively on health, wellbeing and ability to work and yet carers’ contribution to the economy is worth billions a year.   They should not lose out financially in retirement as well.”

To qualify for the credit, a person aged under state pension age must be providing 20 hours per week or more of care for a disabled person who is receiving middle or highest rate disability living allowance, attendance allowance, constant attendance allowance, personal independence payment or armed forces independence payment.

Steve Webb, director of policy, Royal London said: ‘These schemes are introduced with the best of intentions, but they become no more than window-dressing if virtually nobody actually takes them up.  Governments cannot simply hope that people find the information on official websites or rely on the occasional ministerial press release.  It is time for proactive communications with those who are meant to benefit so that far more people get the help to which they are entitled’. Information on how to claim the carer’s credit can be found here. Information for carers can be found here.

Meanwhile, pensioners are just one of the wide range of other groups also missing out. Around 60% of eligible pensioner homeowners either aren’t receiving any benefit at all or are claiming but not receiving their full entitlement. The average loss for each household comes in at more than £1000 a year. Guarantee Pension Credit is a particularly under-claimed example – worth up to £8,286 a year for a single person and £12,352 for a couple

“One in three of those eligible for Guarantee Pension Credit failed to claim with an average loss of £3,431,” warned Stephen Lowe, group communications director at Just Group, which conducted the research. “All of those not claiming this benefit were missing at least £1,000 a year and in one case the loss was £8,060 a year. “Savings Pension Credit is actually the least likely benefit to be claimed with an average unclaimed value of £275 a year. Council Tax Reduction is another area of concern where fewer than half of those eligible are claiming and the average amount being lost is £491 a year.”

“The figures make clear that in a complex system people are struggling to get to grips with what State Benefits they are entitled to,” says Lowe. “It strengthens the case for making free guidance the default option for all those heading into retirement – unless they specifically opt out – and that guidance should include information about entitlements to State help.”

With 40% failing to claim, homeowners in particular may assume they aren’t entitled to significant support. “The message from our State Benefit research continues to be that homeowners struggling for income should take steps to find out what they might be entitled to,” adds Lowe. “The government website is a mine of information or you can go to Citizens Adviceand other charities who may be able to help.”

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UK government warned over sharp rise in child and pensioner poverty

Almost 400,000 more UK children and 300,000 more pensioners plunged into poverty in past four years, new study finds

Two young boys play in a rundown street
 The Joseph Rowntree Foundation report highlights the first sustained increases in child and pensioner poverty for 20 years. 

Hundreds of thousands of children and older people have been plunged into poverty in the past four years, according to a stark analysis laying bare the challenge to families trying to keep up with the cost of living in Britain.

The research from the Joseph Rowntree Foundation (JRF) found almost 400,000 more children and 300,000 more pensioners in the UK were living in poverty last year compared with 2012-13, the first sustained increases in child and pensioner poverty for 20 years. The foundation warned that decades of progress were at risk of being unravelled amid weak wage growth and rising inflation.

The thinktank urged the government to unfreeze benefits, increase training for adult workers and to embark on a more ambitious house-building programme to provide affordable homes for struggling families.

Frances O’Grady, general secretary of the TUC, seized on the report to call for the minimum wage to rise to £10 an hour and for the government to remove the cap on salaries in the public sector. “Working people are not getting a fair deal from the economy, with real wages still worth less than a decade ago,” she said.

The foundation’s latest research, titled UK Poverty 2017found a gradual increase in poverty rates over the past four years, reversing a trend of falling numbers since the mid-1990s.

About a third of children were living in families lacking the resources for their minimum needs in 1994-95 before the rate fell to 27% in 2011-12 with the help of higher employment rates and tax credits introduced under the last Labour government. The proportion of pensioners living in poverty fell from 28% to 13% over the same period.

However, poverty rates increased to 16% for pensioners and 30% for children last year, while the charity also found as many as one in five people across the UK may be in poverty – which it defines as being when someone earns less than 60% of median earnings, adjusted for size and type of household.

The JRF chief executive, Campbell Robb, said: “These worrying figures suggest that we are at a turning point in our fight against poverty. Political choices, wage stagnation and economic uncertainty mean that hundreds of thousands more people are now struggling to make ends meet.”

Recent analysis from the Institute for Fiscal Studies estimates the number of children living in poverty is set to rise to a record 5.2 million over the next five years, up from about 4 million at present. The thinktank said frozen benefits as well as the introduction of universal credit would contribute to the surge, which it said would be most profoundly felt in the most deprived parts of the country.

Tax cuts and minimum wage increases have proved beneficial to some families – as the government has raised the personal tax-free allowance and imposed a “national living wage” of £7.50 an hour – but the JRF report found the gains were outweighed by the reductions from benefit support.

Philip Hammond, the chancellor, unveiled an additional £1.5bn for reforming the rollout of universal credit, helping to cut waiting times for claimants. However, the government still plans to cut working-age benefits by nearly £12bn over the next five years.

The JRF analysis also found evidence that some families were trapped in poverty despite being in work, and were unable to progress much further. It found a rate of one in eight workers, or 3.7 million people, do not earn enough for their needs and that 40% of working-age adults living in poverty have no qualifications, making it harder to earn better pay.

Rachael Orr, head of UK programmes at Oxfam, said it was “deeply concerning” to see more evidence that having a job was not enough to escape poverty. “It’s not just working adults who are affected, but their children too, and it’s a real worry to see progress on child poverty going into reverse,” she said.

Alison Garnham, chief executive of the Child Poverty Action Group, said: “As today’s report shows, we know how to reduce child poverty in the UK – we’ve done it before. Yet at the start of a sustained rise in the rate of child poverty – bewilderingly – there is inaction. The question the report begs is why are we not investing in our children?

“Families with children have had a decade of cuts to their incomes and the damage is showing. Unless there is action now to protect the living standards of low-income families, we will pile up problems for future generations and for the UK economy.”

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