Pensioner couples could lose £3,640 a year from ADI abolishment

Almost 9,000 pensioner couples could lose up to £3,640 per year after the abolishment of Adult Dependency Increases (ADIs), according to the Pensions Policy Institute (PPI).

ADIs could be claimed by individuals receiving a state pension who had a spouse or partner who had no income, very little income, or had no access to a state pension or state benefits of their own.

The government indicated its intention to abolish ADIs in 2006, with 2007’s Pensions Act making provision for the move to go ahead and no new claims being permitted after April 2010.

As such, those who had been in receipt of ADIs would now be at least 75 years old.

Up until 6 April, couples could receive as much as £70 per week through ADIs, with PPI finding that the average amount received as of May 2019 was £57.36, or £2,983 per year.

At the same point, there were 10,817 claimants of ADI, with 2,274 of these also claiming pension credit or housing benefit.

These 2,274 are likely to see some or all of their lost ADI income mitigated through their other benefits, though the remaining 8,543 could lose the entirety of their ADI income and find themselves vulnerable to financial hardship.

This is because new claims for pension credit where the younger member of a couple is under the state pension age are restricted to those who are already in receipt of housing benefit.

PPI said: “It remains that there are still couples where one person has not managed to acquire full eligibility for a state pension and has no independent income, and the loss of ADIs could well be irreplaceable and lead to them experiencing hardship and a lower quality of life in retirement.”

PPI also warned that other changes to the state pension system could compound the effects of ADI abolishment, including changes to the state pension age and alterations to pension credit.

The institute also highlighted that widows and divorced women could also be worse off, given that changes to the state pension mean they are no longer likely to be able to claim state pension based on their husband’s national insurance contributions.

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