Government plans to replace the benefits paid to help people pay their mortgage interest with repayable loans could cause real hardship according to a Freedom of Information reply obtained by Royal London. The company is now calling on the Government to delay the controversial changes until households have been given proper information about what is planned.
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Helen Morrissey, Personal Finance Specialist
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Notes to editor
Extracts from FOI replies received from DWP, most recently on 24th January 2018.
How many letters will you send to recipients of Support for Mortgage Interest highlighting the fact it is to be converted from a free benefit into a loan?
There are currently around 124,000 claimants of SMI all of whom will receive a letter and a booklet notifying them of the transformation of SMI from a benefit to a loan. The booklet includes information on what will happen next and who to contact for help and advice. Claimants will then receive a call to undertake an Informed Discussion about SMI as a loan. Claimants then have the opportunity to agree, consider or decline the loan. They can subsequently change their mind at any time.
How many of the recipients are pensioners and how many are of working age?
Currently there are around 57,000 SMI claimants who are of Pension Credit qualifying age and around 67,000 who are of working age.
How many SMI recipients have elected to take up the option of claiming SMI and repaying it as a loan?
Where a claimant agrees or wishes to consider the loan further the appropriate letter and documentation is issued for completion. Should they subsequently agree to a loan claimants are asked to return the relevant documentation within six weeks.
The Department started to provide information about SMI loans via Serco to low numbers of existing claimants in the first few weeks. There was then a break for one week to assess progress.
The roll out programme for Informed Discussions is still ongoing and not all existing SMI claimants have been contacted as yet. Of those who have been contacted, the vast majority are Pension Age claimants.
Figures as of 22 January 2018 show that 6,850 claimants had agreed to the loan, with 18,177 claimants saying that they might take a loan, as part of the Informed Discussion.
About Royal London:
Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.