People receiving Universal Credit who pay into private or workplace pensions can be entitled to a higher benefit because certain pension contributions should be deducted when their entitlement is calculated.
But cases highlighted by This is Money suggest that some low-income savers have repeatedly struggled to get those contributions recognised. In two cases, Department for Work and Pensions staff corrected the problem after intervention, only for similar errors to occur again.
The cases raise questions about how consistently pension contribution rules are being applied and whether claimants should have to repeatedly challenge decisions to receive the correct amount.
Pension
Universal Credit is designed to take certain pension contributions into account when calculating a claimant’s income.
Private and workplace pension payments can generally be deducted from earnings before Universal Credit is calculated, provided they meet the relevant rules. The policy is intended, among other things, to avoid discouraging people on lower incomes from saving for retirement.
For employees enrolled in workplace pension schemes, the deduction is often handled automatically through payroll reporting.
Private pension contributions can be more difficult because claimants may need to provide evidence of the payments. This is where problems have been reported.
According to cases raised by This is Money and pensions expert Steve Webb, some DWP staff have refused to accept evidence or have failed to make the appropriate adjustment to Universal Credit awards.
For households already working with tight budgets, even a relatively modest monthly difference can accumulate into hundreds or thousands of pounds.
Spooner
One of the cases involved Richard Spooner, a 48-year-old administrator working at a GP surgery in Cambridgeshire.
Spooner contacted This is Money after finding that his private pension contributions were not being properly reflected in his Universal Credit calculation. He said the problem was costing him approximately £110 a month.
After the case was highlighted previously, the DWP acknowledged that an error had occurred. The department said it had improved guidance for staff to help ensure Universal Credit entitlement was calculated correctly.
Spooner says his payments were temporarily corrected, but the problem returned after the case was closed.
He also says he sent numerous messages to DWP staff but eventually stopped receiving the upload links needed to submit evidence of his pension contributions.
This created a practical problem. Even when a claimant understands that pension contributions should be considered, they still need a way to provide documentation and have that evidence properly processed.
Second
A separate case involved a 65-year-old hotel housekeeper from Birmingham who has dyslexia and health problems.
She had repeatedly asked her Jobcentre Plus to consider her pension contributions when calculating Universal Credit. According to the report, her requests were refused, and her work coach eventually prevented her from uploading evidence of the payments.
The DWP initially apologised and corrected the woman’s payments after the case was brought to its attention.
The department also said there was no evidence at that point of a wider issue, while adding that it was reviewing available information and had issued updated guidance to staff.
However, the problem reportedly appeared again the following month, shortly after arrears had been paid.
That meant the claimant had to have the same issue raised with the department again.
Arrears
After This is Money raised both cases with the DWP for a second time, the department paid £660 in arrears to Spooner and £132 to the other claimant.
The DWP also said additional guidance had been provided to staff.
The payments show why the issue matters. The amounts involved were not simply administrative adjustments. They represented money that the claimants were entitled to receive under the applicable rules.
For people on low incomes, missing £100 or more each month can affect household budgets significantly. The impact can be greater when an incorrect calculation continues for several assessment periods.
Claimants therefore need to keep records of pension payments, correspondence and any evidence submitted to the DWP.
Concerns
Steve Webb, a former Pensions Minister and now a partner at LCP, said the repeated cases showed a pattern that needed further attention.
His concern is not only that individual calculations may be wrong, but that errors can return after the department has already reviewed and corrected a case.
That raises a broader question about how consistently frontline staff understand and apply the rules governing pension contributions and Universal Credit.
The DWP has said private pension contributions of this type affect a small proportion of Universal Credit claimants. However, Webb believes the cases brought forward suggest the department should examine whether other claimants may also be affected.
A system that requires claimants to understand detailed benefit rules, collect evidence and repeatedly challenge incorrect calculations can be difficult to navigate, particularly for people with health conditions or other barriers.
Action
The DWP says anyone who believes their Universal Credit award does not properly reflect their personal pension contributions should raise the issue through their Universal Credit journal.
Claimants may want to keep copies of pension statements and other evidence showing the amount and date of each contribution. Maintaining a clear record can make it easier to explain a discrepancy if an award appears incorrect.
The cases also underline the importance of checking Universal Credit statements rather than assuming that pension contributions have automatically been taken into account.
The DWP has corrected the two cases highlighted in the report and says it is continuing to consider ways to improve staff guidance. For affected savers, the key issue is whether those improvements will prevent the same calculation problems from recurring.
For now, anyone making private pension contributions while receiving Universal Credit should check how those payments are reflected in their assessment. If the figures appear incorrect, raising the issue through the Universal Credit journal provides a formal route for asking the DWP to review the calculation.
FAQs
Can pension payments affect Universal Credit?
Yes, eligible pension contributions can affect the calculation.
Are private pension contributions deductible?
Certain private contributions can be deducted under the rules.
What if pension payments are missed?
Ask the DWP to review your Universal Credit calculation.
How can I provide pension evidence?
You can provide evidence through your Universal Credit journal.
