My wife recently lost her job because of Covid – her last salary, including redundancy payment, was at the end of September.
I am a 73-year-old pensioner who has worked since I was 15 up until approximately 10 years ago. I suffer with rheumatoid arthritis and wear a hearing aid.
We have savings of under £5,000. My wife recently applied for universal credit and jobseeker’s allowance.
Retirement finances: I’m 73, my wife has lost her job, and we don’t qualify for universal credit – how can we cope on £1k a month?
We have now been told that because my pension is £178.64 weekly and my wife’s JSA is £74.35 we cannot claim universal credit as the monthly income (by using my existing pension) is over £1,000 per month.
I’m stating the obvious by saying that we cannot survive on £1,000 per month. Our mortgage is £200 monthly, council tax £126 monthly, plus all the normal expenses, insurances, heating and so on.
I have asked for a mandatory reconsideration of the decision but have heard nothing yet. Is there any advice you can offer?
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Steve Webb replies: Until the rules changed last year, as a couple with one member over pension age you would have been able to claim the relatively generous rate of pension credit.
Unfortunately, because one of you is under pension age, you have to apply for the much lower amount payable under universal credit. This will continue until your wife reaches state pension age.
Steve Webb: Find out how to ask the former Pensions Minister a question about your retirement savings in the box below
The rate of universal credit has been squeezed for a number of years and is very low relative to the rates payable to those over pension age who qualify for pension credit.
In 2019/20 the rate of universal credit for a couple was just £498.89 per month, and even with the Covid-related temporary increase in rates this year, the 2020/21 rate for a couple is still only £594.04.
Your pension income plus your wife’s JSA take you well above this level.
You may be entitled to help with your council tax through a separate system administered by your local authority.
In the past, council tax benefit was a national benefit with standard rates applicable wherever you lived. But help with council tax is now run by local authorities so you will need to contact your local council to see how much help you can get.
Help is available to anyone on a low income, even if they do not qualify for universal credit, though the maximum level of help is usually 80 per cent of your total bill.
Because your total income is above universal credit levels you may get less than this.
Regarding your mortgage, the level of state help has been cut back very substantially. Even those on universal credit get no help for the first 39 weeks of a claim.
STEVE WEBB ANSWERS YOUR PENSION QUESTIONS
After this they can claim for a contribution towards their mortgage interest costs but this is in the form of a repayable loan, secured on the property, rather than a social security benefit.
If you think you may have trouble paying your mortgage, it is always good advice to have an early conversation with your lender.
In the current climate you will not be alone, and they may be able to agree some easement of payments, perhaps until your wife reaches state pension age when your combined income should increase.
If you find yourself in serious hardship, you could also approach your local authority. Councils have been given extra money to support people through the current crisis and each will have allocated those funds in different ways.
These schemes go by different names in different areas but the general scheme is called ‘local welfare assistance’.
It would be fair to say that these schemes are generally for those in the most desperate need and they would often require someone to use up all or most of their savings before applying for help.
Finally, for as long as money is very tight, you will I am sure want to scrutinise every penny of outgoings and make sure you are getting the best rates for household bills such as energy, telephone, internet, insurance and so on.
This would be especially worth reviewing if you have been using the same suppliers for many years.
This is Money has information here on how to make sure you are getting the best deals and there are also various price comparison sites which might help you to minimise your costs during this difficult period.
Ask Steve Webb a pension question
Former Pensions Minister Steve Webb is This Is Money’s Agony Uncle.
He is ready to answer your questions, whether you are still saving, in the process of stopping work, or juggling your finances in retirement.
Steve left the Department of Work and Pensions after the May 2015 election. He is now a partner at actuary and consulting firm Lane Clark & Peacock.
If you would like to ask Steve a question about pensions, please email him at firstname.lastname@example.org.
Steve will do his best to reply to your message in a forthcoming column, but he won’t be able to answer everyone or correspond privately with readers. Nothing in his replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.
Please include a daytime contact number with your message – this will be kept confidential and not used for marketing purposes.
If Steve is unable to answer your question, you can also contact The Pensions Advisory Service, a Government-backed organisation which gives free help to the public. TPAS can be found here and its number is 0800 011 3797.
Steve receives many questions about state pension forecasts and COPE – the Contracted Out Pension Equivalent. If you are writing to Steve on this topic, he responds to a typical reader question here. It includes links to Steve’s several earlier columns about state pension forecasts and contracting out, which might be helpful.