Universal Credit claimants across the UK could have been underpaid due a serious error carried out by the Department for Work and Pensions (DWP), according to a former pensions minister.
Sir Steve Webb is warning that thousands of Britons may be in line for benefit payment hikes, including arrears, after he discovered a mistake carried out by the Government department.
Benefit recipients got in touch with the ex-Liberal Democrat minister to share that they had received messages from the DWP in writing which incorrectly refused to deduct pension payments from their wages before determining their Universal Credit amount.
Due to this error, many DWP claimants were accidentally underpaid their benefit entitlement.
A sizeable proportion of those on Universal Credit are in work and are auto enrolled into pensions.
Alternatively, some claimants make personal contributions into private retirement schemes if they are able to.
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Universal Credit claimants are being penalised for work, according to experts
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Any pension payments are meant to be deducted before someone’s Universal Credit is calculated.
This is done to prevent people from being penalised for receiving DWP support and to help people save for retirement.
One woman spoke to This is Money about how she has been impacted by the latest benefit system error.
Rahel, 43, from Birmingham claims Universal Credit but works part-time and is urging for reform to the current system so people can declare pension contributions.
He explained: “I want to ensure claimants in my position aren’t less advantaged as well as ensuring DWP have processes and systems in place to ensure their staff are aware of what is allowed or not allowed within the current rules and regulations.”
A 57-year-old Londoner was able to get back £100 in arrears and a £23 monthly boost in Universal Credit thanks to intervention from Webb.
Speaking to This is Money, he shared how the pension expert explained to him how pension contributions could not be taken away from his earnings before any Universal Credit was calculated.
Furthermore, a third individual was able to claim back £1,500 arrears through the former pensions minister.
Webb said: “‘Paying into a pension has many attractions but particularly for people on Universal Credit.
“This is because your pension contribution should be deducted from your wage before they work out your benefit, giving you a bit extra each month.
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“So it is shocking to hear from readers that DWP has misled them in writing, claiming that personal pension contributions cannot be deducted.
“Whilst I am pleased we were able to get things sorted out for these readers, it makes you wonder how many more people have been misled”
A DWP spokesperson said “We have apologised to these claimants and are working with them to ensure their future Universal Credit entitlement is correct.”
Furthermore, the DWP confirmed its staff, including those working at Jobcentres and Work coaches, get on-going learning and receive guidance which is regularly refreshed.
As it stands, legislation allows personal pension deductions to be deducted from earnings for the purpose of calculating a Universal Credit award. Evidence must be provided prior to the end of a claimant’s assessment period to ensure accuracy.
