Thousands facing £3,500 a year pension cut

Thousands of pensioners are facing a £3,500 cut in their basic state pension when the government abolishes the adult dependency increase (ADI) in April.

The £70 a week cut in benefit is for a partner who has not yet reached pensionable age and is financially dependent on the pensioner.

Saving

The scheme has been closed to new applications since 2010, but will end completely at the start of the new tax year in April for a saving of £33 million.

But a government spokesman said anyone missing out on the benefit may be eligible for Pension Credit or Universal Credit to top up the amount they receive.

Abolished

Former pensions minister Steve Webb, now 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. Losing over £3,500 per year overnight will make a material difference to the standard of living of those who are affected.

Penny-pinching

“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.

“For those with a very low income as a result of this change, it may be possible to claim a top-up through the universal credit scheme, though this would probably mean the younger partner being expected to look for work.”

Package of reforms

A spokesman for the Department for Work & Pensions said: “The ending of ADIs was part of a package of reforms introduced in 2010, which meant that overall more women received the full basic State Pension and more generous National Insurance credits for carers were introduced.

“After 6 April 2020, current ADI recipients may be eligible for a means tested benefit such as Universal Credit or Pension Credit.

Those already in receipt of a means tested benefit should see no change to their income as the loss of the ADI will be offset by an increase in their means tested benefit.”