Warning for thousands over error that could mean you’re underpaid Universal Credit
THOUSANDS on Universal Credit could be affected by an error that means they are being underpaid benefits
This discovery, brought to light by Steve Webb, partner at LCP and former pensions minister, centres around the miscalculation of payments.
The error resulted from DWP staff wrongly including a claimant's pension contributions within their total wage when calculating their allowance.
It means "many thousands" could be due a payment boost, according to Steve.
The issue first came to his attention when a This is Money reader questioned whether their pension contributions were being accounted for in their Universal Credit payments.
Following the initial query, more claimants reported receiving incorrect information from DWP staff.
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Customers claim that staff had refused to deduct pension payments from their wages before calculating their Universal Credit payments.
Steve said: "When the government looks at your income to work out your Universal Credit it should deduct any money you pay into a pension.
"Paying into a pension lowers your income and should mean you get extra benefit.
"But some people have been wrongly told that their pension contributions cannot be deducted."
As a result, many claimants were found to be due payment boosts worth hundreds of pounds after being underpaid.
Others were paid arrears to cover what they should have been owed in the past.
Webb helped one This is Money reader claim arrears worth £1,500.
Another was rewarded with £100 in backpay and a £23 a month hike in their monthly Universal Credit award.
Steve added: "The DWP needs to make sure its staff are properly trained and give the correct information.
"It also needs to check to make sure they are not underpaying many thousands of people."
In response to these claims, a DWP spokesperson said: "We have apologised to these claimants and are working with them to ensure their future Universal Credit entitlement is correct."
It added that work coaches at Jobcentres receive ongoing training and access to guidance.
How does income affect Universal Credit?
UNIVERSAL Credit is a payment to help with your living costs.
You may be able to get it if you're on a low income, out of work or you cannot work.
But exactly how much Universal Credit you get depends on your personal circumstances.
If you or your partner are working, how much Universal Credit you get will depend on how much you earn.
There's no limit to how many hours you can work and still get Universal Credit.
If your wages go up, your Universal Credit payment will be reduced.
If you stop working or your wages go down, your payment will increase.
For every £1 you earn from working, your Universal Credit payment goes down by 55p.
Your income will be your wages plus your new Universal Credit payment.
Most employers will report your wages for you. You will normally only need to report monthly earnings if you’re self-employed.
Personal pension contributions will not affect your allowance.
If you have more than £6,000 of capital it will reduce your Universal Credit payments.
The DWP will take off £4.35 a month for each £250 (or part of £250) of capital above £6,000.
You'll usually no longer be able to get Universal Credit if you have more than £16,000 in capital.
CHECK IF YOU'RE AFFECTED
If you believe you've been underpaid your Univeral Credit allowance because of this error, you'll need to reach out to the DWP.
Steve said: "I would encourage people who are on Universal Credit and pay into a pension to make sure that the wages figure showing on their UC calculation is after any pension contributions have been paid."
If the payment amount doesn't take account of their pension contributions, customers should need to contact the DWP directly with details of their pension payments.
You can contact Universal Credit through your online account by visiting www.gov.uk/sign-in-universal-credit.
You can also call the Universal Credit helpline on 0800 328 5644 and query your allowance.
How much Universal Credit can you get?
TRYING to work out how much Universal Credit you can get can be overwhelming.
There are so many different elements that can affect your claim and it makes the whole process even more complicated.
There are several free calculators that you can use to help you get an estimate, such as Gov.UK, Citizen's Advice, MoneySavingExpert, StepChange and Turn2Us.
You will need:
- Details of all your income, such as existing benefits, tax credits, earnings from employment and your pensions,
- Details of your partner's income if you're married, in a civil partnership or living with someone as a couple. You will be assessed as a couple
- Information on any savings you have,
- How much you pay in council tax per year, and whether you get any discounts, reductions or exemptions,
- Details of your rent or mortgage payments,
- Employment and income information about anyone else living with you, such as grown-up children,
- Details about your carer's allowance if you receive it.
You'll need to make sure that the information provided is as accurate as possible to get the truest estimate.
NOT THE FIRST UNIVERSAL CREDIT BLUNDER
Last summer, millions of people on Universal Credit were found to be at risk of missing out on extra state pension cash due to a separate error.
The DWP identified that the National Insurance (NI) records of 10million people on the benefit had not been updated.
A further 137,000 who've reached the state pension age may also be getting less than they are entitled to because NI credits were never passed on to HMRC.
You can get the full amount of state pension if you have made 35 years' worth of NI contributions or credits.
But Brits have to have made at least 10 years to get at least something.
Millions of households on Universal Credit automatically qualify for Class 3 NI credit - irrespective of whether they work or not.
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However, the error meant that those previously on Universal Credit and now claiming the state pension could be getting less than they're entitled to.
Since the error was uncovered, the DWP has been manually updating the records of affected customers as they approach the state pension age.
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