Converting A Classic Civil Service Pension To A Different Type Of Pension

Sarahspangles

Ripley43 said:

@Sarahspangles thanks for the link. I've read the Alastair example, it doesn't make sense because as you say he's not SPC age, to me he should be SPC age and the benefit example should be SPC not ESA (IR) Then, I think that it would be in keeping with what @kaMelo has said, do you agree?
Not only that however the types of income which are disregarded as notional income are clearly stated on the page preceding the Alastair example and occupational pensions where the claimant has not reached SPC age is one of them so again that makes the Alastair example look wrong.

Yes, the footnote to the Alastair example explicitly refers to the section 106 that kaMelo quotes, which also refers to SPC age. Baffled!

The potentially helpful bit is the description of the point from which pension can be taken into account.

xylophone

 https://assets.publishing.service.gov.uk/media/66a22d1afc8e12ac3edb0498/dmg-vol-09-chapter-51-income-other-than-earnings.pdf

Alastair is 61 and receives ESA(IR). On 1 November the DM discovers that Alastair could apply for his occupational pension from a former employer. He has not yet applied because he would get a bigger pension at the age of 62.

Alastair's former employer tells the DM that payment of a pension of £230 a calendar month would have started on 1 December if an application had been made on 1 November.

The DM decides to take into account a weekly notional income of £53.07 from 1 December.

The DM "discovered"

But does this then imply that anybody under PCA who is on means tested benefits has the obligation to inform DWP of the date from which he is entitled to draw his occupational pension?

It would appear that if a person in such a position advised the DWP of the entitlement as soon as it became due and payable, it would be classed as "notional income" if he continued to defer?

Or if the DWP "discovered" the existence of the pension as soon as it became due it would be treated as notional income from that moment on?

If a person under PCA knows that his DB pension will be taken into account as above and does not declare it as soon as it becomes available, is he deliberately depriving himself of income in order to retain or increase a means tested benefit?

I am absolutely baffled how the above example can co exist with the regulation stating that occupational pensions need not be taken into account until PCA.

kaMelo

xylophone said:

 https://assets.publishing.service.gov.uk/media/66a22d1afc8e12ac3edb0498/dmg-vol-09-chapter-51-income-other-than-earnings.pdf

Alastair is 61 and receives ESA(IR). On 1 November the DM discovers that Alastair could apply for his occupational pension from a former employer. He has not yet applied because he would get a bigger pension at the age of 62.

Alastair's former employer tells the DM that payment of a pension of £230 a calendar month would have started on 1 December if an application had been made on 1 November.

The DM decides to take into account a weekly notional income of £53.07 from 1 December.

The DM "discovered"

But does this then imply that anybody under PCA who is on means tested benefits has the obligation to inform DWP of the date from which he is entitled to draw his occupational pension?

It would appear that if a person in such a position advised the DWP of the entitlement as soon as it became due and payable, it would be classed as "notional income" if he continued to defer?

Or if the DWP "discovered" the existence of the pension as soon as it became due it would be treated as notional income from that moment on?

If a person under PCA knows that his DB pension will be taken into account as above and does not declare it as soon as it becomes available, is he deliberately depriving himself of income in order to retain or increase a means tested benefit?

I am absolutely baffled how the above example can co exist with the regulation stating that occupational pensions need not be taken into account until PCA.

I too was slightly confused by the example of Alistair however I think I can offer an explanation in that it is simply an oversight. The original ESA legislation used a hard age limit of 60 which was the SPC age at the time.

As state pension credit age is linked to the state pension age of women, once the 1995 pension changes started to increase the state pension age for women so did the state pension credit age. The social security amendments in 2010 replaced the hard age limit of 60 with state pension credit age which is how the legislation reads today.
https://www.legislation.gov.uk/uksi/2010/641/regulation/12/made
Under the original legislation the Alistair example was correct, once the amendments were made with the increase in SPC age the Alistair example soon became incorrect but nobody bothered to update the ADM manual.

After reading the original 2008 draft of the legislation I'm even more convinced that there should be no backdating applied. Rather than being included in some catch all rule there are specific rules about the treatment of pensions. They are disregarded under the age of 60 and included in any calculation from age 60. The amendments didn't change the intent of the legislation, simply the age at which the specific rules would be applied.

Of course this is only my interpretation of the rules, ultimately it matters not what I think as it's not my call. Initially it would be a decision maker whose decison could be appealed. The ultimate arbiter of course would be a tribunal and whilst I'd love to be able to give an example of a similar case ruling in the favour of a claimant, despite searching the database I cannot find any. Now that could be my lousy searching rather than no such case existing but without that evidence of success in a similar case it's harder to know what the OP should do.

hyubh

Sarahspangles said:

hyubh said:

Sarahspangles said:

kassy64 said:

Not going to be a popular view, but is it not morally correct for the DWP to attempt recovery, especially knowing that by deferring the pension beyond NPA would benefit significantly.

But OP’s mum hasn’t yet reached SPA. Like many middle-aged people she has some pension provision that assumed retirement at a previous SPA milestone. That’s no longer available and forcing retirement below SPA could be discriminatory.

Genuine question - in what sense is this 'forcing retirement'? For sure it means 'retiring' from the point of view of the PCSPS, but all 'retiring' means from the perspective of a DB scheme is starting to draw benefits from it.
If someone takes their preserved Classic pension at 60, they are free to continue working with another employer if they wish. If however you mean, drawing a DB pension at 60 means you are less eligible for means tested working age welfare benefits... well isn't that just because you now have greater means...?

And if the only job they are qualified and have experience for is with the CS?

I cannot even parse how someone is only 'qualified' for a job in the civil service. If such a person thinks they are above working in the private sector (or heaven forfend, a local authority), that would seem to their prejudices alone.

Why should they be treated differently from all the other examples where pension - occupational or private - has to be disregarded?

I agree the legislation seems clear, so that a person with a decent DB pension appears with the same lack of means that someone without has. And given the complexities of NPAs across different schemes, this seems the only practical way to have it (even if we might argue over whether this is 'fair'). The problem of interpretation seems to lie in Classic specifically not having the concept of a late retirement, so that drawing a deferred Classic pension 'late' just means being put back into the position of having taken it normally, from the scheme's point of view. The legislation in itself just doesn't cover that situation. 

Ripley43

Still completely and utterly confused as to how this is going to be treat, Mum has decided just to not bother claiming the pension because it still seems extremely unclear as to how the backdated arrears are going to affect her ESA retrospectively? So thanks for the help but my Mum feels terrified and that it's just not worth the hassle of what could happen.  She has the same doubt as what @xylophone said:

The OP's mother could have made the application on her 60th birthday when the pension was due and payable.

"The date on which it could be expected to be acquired were an application made" could be interpreted as the 60th birthday?

This seems "tailor made" for the situation where a DB pension is payable before PCA?

I do hope that the OP will come back and confirm what happened. 

So again thanks everyone for your input.

xylophone

in Classic specifically not having the concept of a late retirement, so that drawing a deferred Classic pension 'late' just means being put back into the position of having taken it normally, from the scheme's point of view. 

https://forums.moneysavingexpert.com/discussion/comment/80566254/#Comment_80566254

Ripley43

xylophone said:

in Classic specifically not having the concept of a late retirement, so that drawing a deferred Classic pension 'late' just means being put back into the position of having taken it normally, from the scheme's point of view. 

https://forums.moneysavingexpert.com/discussion/comment/80566254/#Comment_80566254

Thanks. She's just not going to bother claiming it now or ever because she's terrified of the consequences because as you say it will be payable from age 60 and like you said in your post the decision maker could decide to apply it retrospectively as income for ESA purposes.

xylophone

Thanks. She's just not going to bother claiming it now or ever 

As I said in my previous comments, I honestly do not know the answer; several people in the links provided  (as well as posters on the 

forum) have  attempted to give one but it does seem to come down to how the regulations should be interpreted.

I had a look at below (having read the messages in the links I posted again) and wondered whether the operative's answer  did have anything to do with regarding the pension arrears  as "backpay"?

https://www.gov.uk/employment-support-allowance/change-of-circumstances

But even if your mother chose not to draw her scheme  pension before reaching State Pension Age  (aligns now with PCA) which  in her case seems to be earlier than age 67

check here

https://www.gov.uk/state-pension-age/y

why would she choose not to draw it at SPA/PCA?  Would she really choose to waive her right to substantial sums of money?

Another thought, even if the operative is correct, your mother will have her PCLS and her arrears of pension to use for any repayment -  

would any repayment really soak up the whole of the amount received? If, as the operative indicated PCA rules would  apply,

some part of this money could be disregarded?

https://www.gov.uk/government/publications/pension-freedoms-and-dwp-benefits/pension-freedoms-and-dwp-benefits

It is stated in the above that each case is decided on its individual merits - your mother could put aside the worry and write to 

DWP?

Has she checked on her state pension forecast? She can do so here

https://www.gov.uk/check-state-pension

mybestattempt

I have looked at both the legislation and the DM guidance and my view is that:

- while the Classic CSP remains deferred it is not notional income for ESA purposes

- if the Classic CSP is claimed before reaching SPA it is income for ESA purposes which includes any arrears/backdated amount 


The question remains, however, about what happens if the Classic CSP remains deferred until after reaching SPA when the eligibility for ESA has ceased and the arrears are received when ESA is no longer claimed.

Qyburn

hyubh said:

Sarahspangles said:

hyubh said:

Sarahspangles said:
.... That’s no longer available and forcing retirement below SPA could be discriminatory.

Genuine question - in what sense is this 'forcing retirement'? For sure it means 'retiring' from the point of view of the PCSPS, but all 'retiring' means from the perspective of a DB scheme is starting to draw benefits from it.
...

And if the only job they are qualified and have experience for is with the CS?

I cannot even parse how someone is only 'qualified' for a job in the civil service. If such a person thinks they are above working in the private sector (or heaven forfend, a local authority), that would seem to their prejudices alone.

Telling someone they need to resign from the Civil Service and look for another job may not be "forcing retirement", but would be pretty brutal.