The Department for Work and Pensions (DWP) has been found to be penalising low-income savers through a series of administrative errors, with one claimant losing £110 a month in Universal Credit (UC) payments. The blunder, uncovered by former Liberal Democrats Pensions Minister Steve Webb, means that private pension contributions are not being deducted before UC entitlements are calculated, as they should be under DWP rules.
How the Error Affects Claimants
Under current DWP regulations, payments made into private and workplace pensions should be subtracted from a claimant's income when determining their Universal Credit award. This deduction is designed to encourage retirement saving among lower earners, but experts have found that DWP staff are frequently refusing to accept evidence of these contributions, leading to reduced benefit payments.
Steve Webb, who helped create the Triple Lock for pensions, highlighted the case of Richard Spooner, a claimant who was wrongly denied £110 each month. When Webb intervened on Spooner's behalf, the DWP acknowledged the issue and stated: "We have improved guidance for staff to accurately assess Universal Credit entitlement to help prevent this issue happening again."
Official Response and Concerns
Webb expressed deep concern over the recurring nature of these errors, saying: "People on Universal Credit who are doing what the government wants and making provision for their retirement are being told wrongly that their pension contributions are not deductible. But it is even more shocking when cases we have brought to the Department’s attention and been resolved start to go wrong again in a matter of months."
He further criticised the system's complexity, adding: "We need a system which works without people having to be experts in benefit law and insisting on their rights. And we need DWP staff at all levels to be fully trained to apply the rules correctly and consistently."
DWP Statement and Next Steps
In response, a DWP spokesman said: "We have corrected these cases and contacted both customers directly to explain what happened. Private pension contributions of this kind affect a very small proportion of Universal Credit claimants, but we are continuing to look at how we can improve guidance for staff to prevent these errors."
The DWP also advised any claimant who believes their UC award does not correctly reflect their personal pension contributions to raise the issue through their online journal. This admission comes amid broader scrutiny of benefit administration, with experts urging the department to ensure consistent and accurate application of rules across all levels of staff.
Impact on Claimants and Future Reforms
The errors have significant financial implications for low-income savers, potentially denying them hundreds or thousands of pounds over time. For those already struggling to manage on reduced incomes, the loss of £110 per month can be substantial, affecting their ability to meet basic living costs.
Webb’s findings underscore the need for more robust training and oversight within the DWP to prevent such mistakes from recurring. As the department works to refine its guidance, claimants are encouraged to remain vigilant and check their statements to ensure they receive the full entitlement they are due.
