UK. DWP pension error leaves thousands at risk of Universal Credit underpayments
A Department for Work and Pensions administrative error may have left many thousands of Universal Credit recipients out of pocket, with those affected potentially entitled to both increased payments and backdated arrears.
The blunder, brought to light by pensions expert Steve Webb, centres on claimants who contribute to pension schemes while receiving Universal Credit.
Multiple benefit recipients came forward after discovering that DWP staff had incorrectly declined to subtract their pension payments from earnings when calculating their Universal Credit entitlement.
Under the rules, pension contributions should be removed from income calculations before UC awards are determined, ensuring those saving for retirement are not financially penalised for doing so.
One reader who contacted This is Money described their ongoing battle with the DWP. They said: “I’m writing to let you know, following your previous articles, that Universal Credit are continuing to incorrectly not recognise pension payment contributions when calculating net income for the purpose of UC awards.”
The claimant explained they had begun paying £200 monthly via direct debit into a personal pension alongside their workplace scheme, bringing total contributions to 15 per cent of gross salary.
“Despite reporting this on my journal online they have repeatedly told me that I cannot have my net pay award adjusted to reflect the total pension payments that I am making,” the reader stated.
Their request for a mandatory reconsideration was subsequently ignored, leaving them considering tribunal action.
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