Accumulating Pension Credit - Capital reassessment?

Sea_Shell

If someone is currently getting full pension credit and various other disability benefits, plus they have savings under the £10k threshold.

What happens if they don't spend it all month to month and it accrues as a balance in their bank account?

When does it become "capital" in this context and have to be declared?

They may only have a balance over £10k temporarily, which will be duly spent on things they need (not luxuries) at some point, within say 3-6 months.

Surely the DWP don't expect to be notified monthly, do they?

I've tried searching for an answer on line, but I can't seem to find an answer, but I seem to recall there being a definition.

Thanks

Alice_Holt

Having savings over £10k does not result in PC stopping. It's not a threshold in that sense.

However the balance of any savings over £10k does attract a deemed income which is taken into account by the DWP in the calculation of any PC due. This assumed income is £1 pw for every £500 (or part of £500) of savings above £10k.

To avoid any overpayments (and consequent repayment of PC by the claimant), the DWP should be notified by the claimant when savings reach £10k and then subsequently when the next £500 level is reached.   
 
https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs48_pension_credit_fcs.pdf

(See page 15)

In terms of the timing of these notifications, I'm not sure if there is any relevant legalisation. However, I'd be inclined to advise the DWP at the end of the four weekly PC period (akin to UC where it's the capital at the end of the assessment period which is relevant).

Because PC passports to the claimant to full HB and CT reduction, It is sensible to ensure frugal spending habits don't give rise to a situation where the deemed capital income ends PC eligibility.  

Sea_Shell

Even if they "save up" to buy a new needed "thing"?

Say, for example, they currently have £9500, but want to "save" £500 per month, for 10 months towards some house refurbishment, that will cost £5000.

Rather than spend the £5000 up front and then worry about leaving themselves short, for an emergency.

Would they have to notify DWP every month from month 2, and then again in month 11?

Alice_Holt

Sea_Shell said:

Even if they "save up" to buy a new needed "thing"?

Say, for example, they currently have £9500, but want to "save" £500 per month, for 10 months towards some house refurbishment, that will cost £5000.

Rather than spend the £5000 up front and then worry about leaving themselves short, for an emergency.

Would they have to notify DWP every month from month 2, and then again in month 11?

     If they fail to notify the DWP when savings exceed £10k, £10.5k, £11k, £11.5k, etc then their PC calculation will be wrong.

    They will be paid too much PC, and the DWP would (eventually) seek to recover any overpayments.
The onus lies with the claimant to notify the DWP of any changes of circumstances (for any benefit not just PC).
Whilst such a failure to notify is hardly likely to give rise to a fraud interview, it might in some circumstances attract a £50 civil penalty.

   It is not pleasant for any claimant to deal with overpayments (and potentially DWP debt management), so they are really best advised to comply with their responsibilities and notify PC of the relevant changes in savings. 
   It would become especially problematic if PC was paid (due to non disclosure) after entitlement had ended, and the claimant was continuing to receive full HB & CT support. The overpayments would then extend to PC, HB, & CT support.


  https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1145438/dmgch84.pdf

Sea_Shell

That's bonkers!!


So they can spend the £5k up front, and then replenish their savings, but not the other way round?


Is there no period of capital disregard?

Spoonie_Turtle

What happens if they don't spend it all month to month and it accrues as a balance in their bank account?

When does it become "capital" in this context and have to be declared?

If the rules are the same for PC as they are for UC then unspent income becomes capital in the following payment period - e.g. if State Pension is paid 4-weekly, any unspent by the end of the 4 weeks would become capital from the next 4wk period.  [That's if the rules are the same, of course, I'm not very conversant with the intricacies of Pension Credit rules.]

As for saving up, AFAIK no there's no disregard.  There may be for certain acquisitions of capital (a common one is proceeds from a house sale if intended to buy another home) but not for saving up - accumulating savings - for a specific purpose.

poppy12345

Sea_Shell said:

That's bonkers!!

Why is that? There's a £10K disregard, which is quite a lot of money.

Sea_Shell said:

Is there no period of capital disregard?

No, not for savings of more than £10K. The disregard is £10K.

Sea_Shell

Just that it could make someone feel vulnerable if they had to spend a huge chunk of their savings up front, if then another unforseen expense came along that then wiped them out.   If they are a homeowner... anything could need replacing.   


On the flip side, are there any rules about what they're allowed to do with their income (spend/gift) each month so that it doesn't accrue?*

Are they only allowed "basic" home improvements etc.

In this example, should they try and get a loan, for the £5k if their income could cover the repayments?


* Is it DoA if you're only spending income, not capital within the disregard?

kaMelo

Spending income will never (I think) be considered as deprivation as it's income. 

There are no rules to prevent anyone spending/gifting their money however they wish to do so. 
Whether someone would still qualify for a means tested benefit after doing so is a completely separate question. 

Spoonie_Turtle

kaMelo said:

Spending income will never (I think) be considered as deprivation as it's income. 

There are no rules to prevent anyone spending/gifting their money however they wish to do so. 
Whether someone would still qualify for a means tested benefit after doing so is a completely separate question. 

That's my understanding too.

Re: spending/gifting money, it's only relevant if it's capital, and possibly only relevant if it takes someone from above the threshold to below, or reduces how much they're above the threshold.

(But again, I'm not 100% certain for PC.  It would be strange for the rules to be harsher for that than for the other income-replacement benefits though.)

poppy12345

Spoonie_Turtle said:

kaMelo said:

Spending income will never (I think) be considered as deprivation as it's income. 

There are no rules to prevent anyone spending/gifting their money however they wish to do so. 
Whether someone would still qualify for a means tested benefit after doing so is a completely separate question. 

(But again, I'm not 100% certain for PC.  It would be strange for the rules to be harsher for that than for the other income-replacement benefits though.)

The rules are no different for those claiming PC to any other means tested benefits. Other than the savings limit difference.