Veterans receiving Universal Credit are being told by Department for Work and Pensions staff that their military pension counts as “unearned income”, resulting in a pound-for-pound deduction from their benefit payments. The classification means that every pound of a service pension reduces Universal Credit entitlement by the same amount, effectively wiping out the financial value of the pension for those still eligible for support.
A group of former servicemen are now preparing a legal challenge against Work and Pensions Secretary Pat McFadden, according to The Telegraph. One veteran said he has been ordered to repay £8,800 and will lose £463 each month from his Universal Credit award, which exactly matches the monthly value of his military pension.
Veteran Describes “Clearly Targeted” Treatment
The unnamed ex-serviceman told The Telegraph: “My case is similar to many thousands of veterans out there. Some have been chased for £20,000 or £30,000. It’s clearly targeted.” He added: “Classing the military pensions as earned income would change the lives of thousands of veterans up and down the country.”
His comments highlight growing anger among veterans who argue that military pensions should be treated differently from civilian occupational pensions because they are earned through service and often replace a salary during a shorter military career.
Thousands of Veterans Claiming Universal Credit
According to official figures, around 68,000 people in Britain who are claiming Universal Credit have previously served in the Armed Forces. That means a large proportion of ex-military households could be affected by the DWP policy, with some reportedly being chased for £20,000 or £30,000 in overpayments.
The legal challenge is being organised by a group of former military personnel who argue the DWP interpretation of “unearned income” is unfair and contrary to the Armed Forces Covenant, which promises that no one should be disadvantaged by their service.
Charity: Financial Security Is a Foundation of Post-Service Life
George Lankester, senior policy and public affairs manager at Help for Heroes, urged the Government to reconsider. He said: “Those who have served our country should be supported in post-service life – we hope that the Government takes another look at this. Financial security is one of the foundations of living well after service. The Armed Forces Covenant is clear – that no veterans should face disadvantage as a result of their service. We must ensure this principle is upheld, and that all parts of Government are working to remove barriers to financial security for veterans.”
Lankester’s intervention adds to pressure on the Government to change the rules, with campaigners arguing that the current system unfairly penalises those who have completed military service.
DWP Says Pensions Treated Same as Other Occupational Pensions
In response, a DWP spokesman said: “We have enormous gratitude and respect for those who have served our country, and we want to make sure veterans get every penny they are entitled to. Lump-sum payments are disregarded when assessing eligibility for Universal Credit for up to 12 months, and even longer if the funds are placed into a trust or annuity. Regular Armed Forces pensions intended to provide income in retirement are treated as unearned income and are taken fully into account, in line with the approach for other occupational pensions.”
The spokesman’s statement confirms that the DWP sees military pensions as being in the same category as any other workplace or personal pension. However, veterans argue that the context of military service, which often begins at a younger age and involves physical risk, should make a difference.
What Does This Mean for Veterans?
For an individual veteran, the impact can be severe. A typical military pension of £463 per month would be deducted in full from any Universal Credit payment, leaving no net gain from the pension for low-income households. Over a year, that amounts to more than £5,500 in lost benefits. If a veteran was overpaid because their pension was not initially reported, they may be asked to repay substantial sums.
The planned legal challenge could force the Government to change its guidance or defend its policy in court. Until a ruling is made, veterans are advised to seek independent welfare rights advice before accepting any repayment arrangement or reducing their claim.
