Good for Steve Webb and Money Mail;

This could be a big one. We have found multiple cases of people being wrongly told by DWP – in writing – that their personal pension contributions could not be allowed against their income when claiming Universal Credit. If you are on UC and pay into a pension, have a read. https://t.co/mGOiOmFWRs

— Steve Webb (@stevewebb1) July 24, 2024

Tanya Jefferies takes up the story

A This is Money reader alerted Webb by writing in to ask if pension contributions were being accounted for correctly in their UC payments.

More people then got in contact to say they had received messages in writing from DWP staff, wrongly refusing to deduct pension payments from their wages before calculating their Universal Credit.

The result was they were shortchanged on Universal Credit payments

I have to admit to not knowing that Universal Credit pays auto-enrolment contributions and I’m supposed to be on the ball. How This is Money becomes a lightening rod for issues like this is that it keeps working with Webb who had the first hand experience when pensions minister – and the eye for detail. They make a great team.

Here is how Tanya and Steve explain this

Many Universal Credit claimants hold jobs and are therefore auto enrolled into pensions, or some make personal contributions into private schemes if they can afford it.

These pension payments are meant to be deducted before their UC is calculated, to avoid penalising people who receive state benefits – in some cases, temporarily – for saving for their old age.

Rahel Hussain, 43, a carer and part-time restaurant worker from Birmingham who challenged the amount of Universal Credit he was receiving, called for a system for people like him to report pension contributions.

‘I think this is crucial for claimants like myself,’

he said.

‘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 picture framer from London has now received around £100 arrears and a £23 a month hike in his monthly UC payments.

He told us that before Webb’s intervention the DWP had been ‘absolutely adamant‘ his pension contributions could not be deducted from his earnings prior to his UC payments being calculated.

In a third case, Webb helped a This is Money reader get arrears of around £1,500.

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 confirmed that personal pension contributions should be deducted from earnings before Universal Credit is calculated.

However, evidence of contributions has to be provided before the end of a claimant’s assessment period to ensure accuracy.

The DWP added staff including work coaches at Jobcentres receive on-going training and access to guidance which is refreshed at regular intervals.

Why this kind of journalism is so important

I have heard it said by civil servants working with people’s personal finances that they are more scared of Steve Webb and Money Mail than they are of their own bosses.

This kind or journalism is important on two levels. Firstly it keeps civil servant’s honest and secondly it provides low-waged people with little access to advice, with help in these hard to understand areas.

So whatever you are doing Steve and Tanya – please keep doing it. And don’t forget that from this time next year, millions more like Rahel will be able to claim Government incentives for saving which they’ve been denied by the net-pay anomaly. Making pensions affordable for those on low wages is a noble theme, which if followed, could lead to increasing AE contribution rates in time.