Pensioner couples to miss out on £7,000 because of ‘toy boy tax’

Hannah Godfrey reports...

Pensioner couples are set to miss out on thousands of pounds because of incoming changes to pension credit rules for mixed-age couples.

From 15 May, couples will only be able to claim pension credit when both are over the state pension age, a change that has been dubbed the “toy boy tax” by pension and employee benefits firm Quantum Advisory.

Previously, a mixed-age couple could claim the benefits when the oldest of the pair reached state pension age, which is currently 65 for both men and women. Those already in receipt of the credits will not be affected, but new claimants after 15 May could lose out on up to £7,000 a year in benefits, the firm said.

Quantum Advisory partner and actuary Stuart Price said the purpose of pension credit is to give a little extra to the poorest pensioners: “To put it into context, a couple currently receiving universal credit will be earning £5,986.68 a year.

“Under existing rules, when the older partner reaches state pension age, they will typically receive pension credit of £13,273 a year. From 15 May, the couple will only be able to claim the higher income when both are of retirement age.”

He continued: “While I understand the government not wanting to discourage people who are of working age from seeking employment, I do think this new rule has been swept under the rug and may come as a shock to some following the change-over date.”