Pension credit and increase in savings beyond limit.

memyself28

22 years ago elderly relative correctly declared income and savings and qualified for pension credits of around £20 a week. Her state pension was her only income. She  came to live with us and we paid all the bills and charged her no rent. Accordingly her savings from her only source of income grew quickly and on her death aged almost 98 we have discovered that her savings from her pension have significantly exceeded the limit for claiming pension credit. Fortunately the bulk of this untouched money was in a joint account with my wife and this does not form part of the estate. However there is about £25 K In an account in her name that forms her estate. Her will gifts this to two relatives. I am executor. The bank does not require probate before releasing the funds.

Because there is no probate, should I notify DWP and will they be persuaded that there was no overpayment because the savings were her unspent pension and for how long should I defer distributing the estate.

Grateful for the experience of others and to know of any relevant precedents.

NedS

Cases where an estate exceeds capital limits and the deceased has been in receipt of means-tested benefits normally get flagged up, but it can take a significant amount of time for them to investigate.

As executor, you should contact DWP to determine if there has been any overpayment of benefits and if so, these will need to be repaid from the estate before the remaining funds can be distributed.

Whilst the "bulk of the money" in the joint account with your wife may fall outside of the estate (how?), the deceased presumably had beneficial rights to 50% of it whilst they were alive, and again that would need to be taken into account when determining any entitlement to means-tested benefits so should be declared to DWP. Why was it in a joint account with your wife? Was it solely the deceased relative's money and in a joint account to allow your wife "administrative access" to assist them with their affairs, or was half of the money your wife's?

calcotti

memyself28 said:

22 years ago elderly relative correctly declared income and savings and qualified for pension credits of around £20 a week. Her state pension was her only income. She  came to live with us and we paid all the bills and charged her no rent. Accordingly her savings from her only source of income grew quickly and on her death aged almost 98 we have discovered that her savings from her pension have significantly exceeded the limit for claiming pension credit. 

There is no savings limit for claiming Pension Credit. However any savings over £10,000 reduce PC by £1/week for every £500, or part thereof, over £10,000.

….will they be persuaded that there was no overpayment because the savings were her unspent pension and for how long should I defer distributing the estate

The fact the savings were the result of unspent pension is immaterial, all unspent income becomes capital attendance the period it is paid for.

You should not distribute the estate until you have a conclusion from DWP about any money owed otherwise you, as executor, will be responsible for paying back anything owed,

memyself28

Thanks for comments.  We are aware of the regulations and I have a letter drafted to DWP but before sending it I am  interested in any comments or precedents from contributors  (eg Parliamentary and Health Service Ombudsman’s decisions) or experience of DWP’s likely attitude and suggestions of how to present the facts.

The money was in a joint account because the relative wished her pension income to be used to pay her share of bills etc. We chose not to use it.during her life time. Under survivorship, according to the bank, it passes to the surviving account holder.

Factually, the build up in both joint account and  savings is no more than the unspent pension and benefits that accrued because we kept her more or less cost free.

Further comments very welcome.

Robbie64

Was there an Assessed Income Period in place on the Pension Credit claim? If so, savings accrued or gained during an AIP will have no effect on PC entitlement. The problem will be if an AIP was set, expired and the claim was reviewed. If there were savings, were they declared at that point? Savings includes money held in joint accounts. It's possible that over the course of 20+ years that there was more than one AIP. You would need to discuss this with the DWP.

memyself28

Robbie 64

 Thank you. This may be extremely helpful. You appear knowledgeable and I am grateful for your informed thoughts.

 I have what I believe to be all the paperwork she received from DWP. She was meticulous in record keeping until latter years. There is a letter dated 6 May 2004 that confirms that an AIP is in place covering 6 October till 20 April 2010. There is nothing more until 28 January 2020 when it is again confirmed that an AIP is in place but it refers  to a change in the law that meant no new AIPs may be set from 6 April 2016 but existing AIP will continue unless “you” report a change of circs. that would cause it to end. There were similarly worded letters in 2021 and 2022. So, looks like AIPs were in place continuously until she died. If so then, in accordance with what you have written, the increase in savings is immaterial and may be ignored. Is that correct please in your opinion.

I have very clear notes in her handwriting of what seem to be declarations of assets she made to DWP on 1 12 03 when, presumably, she was making her claim by phone. She names the two officials to whom she spoke. Also, one, undated, may refer to a later declaration. 

Her weekly pc was, initially, £18.12 on 7 October 2003,  and when she died last month she was receiving £20.29 from 12 April 2022. So at the end of the day the amount that may be at issue is not so very great.

So much for the facts, but, AIPs apart,  (which may be really good news) I can find nothing that deals with savings that accumulate simply because the recipient of pension credits did not spend all her sole source of income - her pension and credits - and addresses the circumstance that would appear to disqualify from PC entitlements. That seems unreasonable and morally wrong. I will be surprised if the matter has not been determined by a tribunal or court.

Any further comment from you or anyone else would be welcome.

calcotti

If an AIP was in place then there should be no overpayment. However, as executor, I recommend that you provide DWP with the relevant details and ask them to confirm that nothing is owed due to the AIP. Do not distribute the estate until DWP have done this.

Regarding your final paragraph the law is clear that any income unspent at the end of the period it Is paid for then becomes capital.
see https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1073456/dmgch84.pdf
paragraph 84922

Robbie64

I'm not an expert in AIP's, I just remember why they were introduced and how when one was set it was to cover a set period.

Many years ago, prior to the introduction of Pension Credit and back when pensioners were paid Income Support as part of the Minimum Income Guarantee, they would have a review form sent out every so often (every three years, if I recall). The introduction of AIP's under Pension Credit removed the need for a review to take place as often but neverthless I was under the impression that there would still be a review prior to a new AIP being set, when the old one was about to expire. Do you have anything from 2010 that indicates that her PC was reviewed? Or was it simply extended to a longer period (I realise you possibly won't be able to answer this, it might have been an administrative change in the setting of AIP periods). I found this https://commonslibrary.parliament.uk/research-briefings/sn06677/ which includes a detailed briefing PDF of the AIP rules in 2013. Of particular relevance are two rules that may actually be very beneficial to yourself, assuming this is exactly how things worked:

1. The standard AIP for someone aged 65+ was set at 5 years from the introduction of Pension Credit

2. For a recipient aged 80 or over when an AIP is set or who becomes 80 during their AIP the AIP will not end at the 5 year point but will continue indefinitely unless specific circumstances occur which would end the AIP (see page 7 of the linked PDF) . Savings isn't one of them as far as I am aware.

You mention that the relative was 97 when she died. Was she under 80 when her first AIP was set in 2004 but then she became 80 before the AIP expired in 2010? If so and the above is correct then she would have had her savings protected by an AIP during the entirety of her claim to PC.

Hopefully others can confirm the above is correct, or if not, state what the correct position is.

Robbie64

I've just read the PDF to the next page and page 8 deals specifically with changes to capital during an assessed income period which will mean that the amount of money that was in the bank would have no effect on the amount of PC.

Changes to capital during an assessed income period
Your customer does not have to tell us about changes to their capital during the assessed income period.

memyself28

Robbie 64,
Many many thanks! That does look fairly conclusive. With your pointers I will now carry out further research and reconsider the position and decide if I need to do anything. I may at the end of the day write to DwP and ask for confirmation of the effect of the protection afforded by an AIP.

However grateful for thoughts from others.

memyself28

Robbie64

With your pointers I have checked the current guidance on gov.uk. You are absolutely correct. With a current AIP ( hers is indefinite because of her age) there is no need to advise DWP of increases in savings UNLESS IT WOULD INCREASE YOUR BENEFIT.

That is quite conclusive of her situation.

That is a relief.

Thanks again.