Defence Secretary Wes Streeting says he is "looking at" Pension Credit counting military compensation as income
The Defence Secretary, Wes Streeting, told MPs on 19 October 2026 that he is "looking at" the way War Pension and Armed Forces Compensation Scheme (AFCS) payments are counted as income in Pension Credit. Asked whether he would work with the Department for Work and Pensions (DWP) to end the deduction, he replied: "I recognise the challenge raised by the right hon. Member. That is something I am looking at." Five days earlier, the pensions minister had told the Commons that the government is "not in a position to change the regulations". Nothing has changed: the Budget that afternoon made no change, and we have not heard anything further from the Defence Secretary so far. Today's rules are on our pages for AFCS payments and War Pensions.
Key takeaways
- On 19 October 2026 the Defence Secretary, Wes Streeting, told MPs he is "looking at" War Pension and AFCS payments being counted as income in Pension Credit. He gave no detail and no timetable.
- On 14 October the pensions minister, Torsten Bell, said the government is "not in a position to change the regulations", calling it a long-standing position.
- No review has been announced and the rules have not changed. It is a change of tone from a Cabinet minister, not a change of policy.
- The Pension Credit rules are DWP regulations, so a change would have to come through DWP. The question Streeting answered asked whether he would work with DWP.
- Today Pension Credit ignores only £10 a week of a war disablement pension or an AFCS Guaranteed Income Payment. Universal Credit already ignores both in full.
- Your AFPS service pension is not part of this. It is an occupational pension, not compensation, and counts in full.
- The Budget on 28 October 2026 made no change, and we have not heard of any further announcement so far.
What the Defence Secretary said
The exchange came during topical questions at Defence questions in the House of Commons on Monday 19 October 2026. Wendy Morton, the Conservative MP for Aldridge-Brownhills, asked:
"Veterans injured serving our country can see their pension credit cut because their military compensation is counted as income. How is that consistent with the armed forces covenant? Will the Minister commit to working with the Department for Work and Pensions to end this deduction?"
Wes Streeting, Secretary of State for Defence since 20 July 2026, replied in full: "I recognise the challenge raised by the right hon. Member. That is something I am looking at."
That is the whole exchange. He did not say what he is looking at, whether DWP is involved, or when anything might be decided, and he said nothing about the Budget.
How it compares with what DWP said five days earlier
On 14 October, answering Josh Babarinde's adjournment debate, the pensions minister Torsten Bell, who holds posts at both DWP and the Treasury, said: "the Government are not in a position to change the regulations." He called it "a long-standing position", and said DWP "is content that this is consistent with our obligations under the armed forces covenant".
Morton framed her question in exactly those terms, asking how counting compensation as income fits with the covenant. Streeting did not repeat DWP's answer. He said he recognised the problem.
There are two limits on how far that goes:
- "Looking at" is not a commitment. No review, consultation or costing has been announced.
- The Defence Secretary does not write these rules. The £10 limit is in DWP's Pension Credit regulations, which is why Morton asked whether he would work with DWP. A change would have to come through DWP.
It is still a different tone from DWP's, and it came from the Cabinet minister in charge of the armed forces. The cross-party pressure behind it, from MPs and the Royal British Legion's Credit their Service campaign, and what the Budget did with it, are set out in our post on the Budget and the military compensation means test.
The rules today, in brief
| Benefit | War disablement pension or AFCS GIP today |
|---|---|
| Universal Credit | Ignored in full |
| Pension Credit | £10 a week ignored, the rest counts as income |
| Housing Benefit | £10 a week ignored, and your council may choose to ignore it all |
| Income Support, income-based JSA, income-related ESA | £10 a week ignored |
AFCS lump sums are treated as personal injury capital, and several War Pension allowances, along with Armed Forces Independence Payment, are already ignored in full for Pension Credit. The benefit-by-benefit position is on our AFCS and War Pension pages.
Your AFPS service pension is separate. It is an occupational pension, not compensation, and counts in full in every means test.
What happens next
- The Budget, 28 October 2026. MPs from several parties asked the Chancellor to use it to change the rules. It made no change: the Budget documents do not mention War Pension or AFCS payments. Our post on Budget 2026 and the military compensation means test has the detail.
- Pauline's law, 27 November 2026. Josh Babarinde's bill, which would require the government to report on disregarding these payments, is listed for second reading that day. It would not change the rules itself.
- Anything further from the MOD. We have not heard anything further so far. If "looking at" becomes a review, or a joint announcement with DWP, we will add it here.
We will update this post if the Defence Secretary or DWP announces anything further. If the rules change, our AFCS and War Pension means-tested benefits pages will change with them.
What to do in the meantime
- Claim on today's rules. If you are entitled to Pension Credit now, a possible future change is no reason to wait.
- Give DWP the breakdown of your award, not just one weekly total, because several War Pension allowances are already ignored in full.
How a War Pension is treated now
The war disablement pension and each allowance, benefit by benefit, plus care charging.
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Frequently asked questions
Armed Forces Pension Calculator Team
We build the calculators and write the guides on this independent site, working from the official AFPS scheme rules and published sources such as gov.uk, Veterans UK and the Government Actuary's Department. We are not part of the MOD and we are not regulated financial advisers, so everything here is general information, not personal advice.
Sources: gov.uk · GAD factors · Veterans UK · Forces Pension Society · MoneyHelper.