The DWP rules on the benefits cap can affect state pensioners too (Image: Getty)
State pensioners have been issued a warning over the annual household benefit limit which they could fall foul of in certain circumstances.
Limits on benefits have become the centre of attention again recently after a vote this week to scrap the two-child benefit cap in Parliament.
Confusingly, the two-child benefit cap and the benefits cap are not actually the same thing, though one can lead to the other.
The benefits cap is the total limit on how much one household can receive in benefits in a single year. In London, it maxes out at £25,323 and outside London it’s £22,020 for families with children. For single adult households, it’s £16,967 or £14,753 outside London.
It means that even if you are entitled to more benefits that would pay you more than this, you won’t be able to collect them if it would exceed this threshold. Indeed, Child Benefit is one of those benefits affected, so it cannot exceed these limits even if the two child limit is removed.
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The state pension is not normally a benefit subject to the cap, but financial experts at AJ Bell have explained a situation in which state pensioners still could be affected by the benefits cap.
They say that a ‘mixed age’ couple, where one person is a state pensioner, and the other is not, who both live together, could see their total household income affected by the cap.
Charlene Young, senior pensions and savings expert at AJ Bell, explained: “While the benefits cap does not generally apply to people over state pension age, it can impact a ‘mixed age’ couple – where one member of a couple living together is over the age they can claim their state pension, but the other person has yet to reach it.
“The cap could mean that your Universal Credit (or your housing benefit) is reduced.”
However, there are also exemptions, including benefits that wouldn’t be affected.
Ms Young continued: ““There are other exemptions that could mean a mixed aged couple are not affected by the cap.
“These include receiving Universal Credit because you have a disability that means you can’t work, you are caring for someone with a disability, or, if you and your partner earn more than £846 a month (combined) after any tax and National Insurance.
“In some cases, starting work or increasing hours could lift you out of the cap. Exemptions also protect couples where one member is receiving Personal Independence Payment, Disability Living Allowance, Armed Forces compensation and certain war pensions.”
She added: “If you’re worried about the benefits cap you can contact the Universal Credit helpline on 0800 328 5644 or the DWP here. To see if you’re eligible to claim, there are a number of tools and calculators out there, including those listed at the government website.”
Charity Independent Age reports: “If you’re over State Pension age, the benefit cap will not apply to you. But if you’re in a couple and only one of you is over State Pension age, the cap may apply, unless you’re not affected because you get certain other benefits.
“The benefit cap does not apply if you are in a couple and you have both reached State Pension age.
“If you’re in a couple where only one of you is under State Pension age, call our free Helpline on 0800 319 6789 for advice.”