Backdated Occupational Pension

HillStreetBlues

Taylor2000 said:

@HillStreetBlues, @Yamor, thank you for the replies. However, I'm finding it hard to understand that if the pension arrears are paid after SPA then an overpayment will still have occurred. The reason being is that you are legally entitled to defer income from a pension until SPA. I can't find anywhere where it sates you cannot defer a pension that pays the back payments to you at a later date. 

My view is that you are getting the pension and you are getting every week / month what it's you haven't taken payment, those payments just build up until you receive the money. Basically the pension is being paid, but you are not getting the money,  that's why it will be classed as income, not a one off capital payment.

Taylor2000

So effectively it's only certain types of pension that you can safely defer when you are in receipt of IR benefits even though this is not specified in legislation. How on earth is the man/woman in the street supposed to know this? 

Catonthemoon

@Yamor “it is NEVER claimed”. Do you mean the person passes away without ever having claimed it? If yes, then deferring would all have been in vain! You didn’t get to enjoy what would have been a nice sum of money, however, your beneficiaries will almost certainly be toasting you. Cheers 🥂 

Yamor

Catonthemoon said:

@Yamor “it is NEVER claimed”. Do you mean the person passes away without ever having claimed it? If yes, then deferring would all have been in vain! You didn’t get to enjoy what would have been a nice sum of money, however, your beneficiaries will almost certainly be toasting you. Cheers 🥂 

That's true yes!

But I suppose what I mean is that if the claim hasn't yet been made, and DWP clearly can't predict the future, then they could still say that there is at a minimum notional income (of course this is all assuming you've reached pension age).

kaMelo

Catonthemoon said:

@Yamor “it is NEVER claimed”. Do you mean the person passes away without ever having claimed it? If yes, then deferring would all have been in vain! You didn’t get to enjoy what would have been a nice sum of money, however, your beneficiaries will almost certainly be toasting you. Cheers 🥂 

Not really. As it's a DB pension there is no pot of cash to dish out, just a promise to pay an amount from a certain date (NRA) until death and upon death, if there are any, a spouse and/or child dependant pension.

NedS

Yamor said:

For those not convinced by what I'm saying, think about my Carer's Allowance example. We know that when Carer's Allowance is awarded and backdated for a few months, then UC recalculate the past months, and generate an overpayment. There is of course no difference whether the Carer's Allowance is paid out before or after turning pension age.

Pension income is no different.

Legally that may be the case, but operationally UC will automatically calculate the overpayment in your CA example because the UC system will see and take into account the CA payments as recorded on CIS (so once a CA award is eventually added onto CIS, the UC system sees it and now takes it into consideration generating the overpayment), but the UC system has no knowledge of any pension payments other than state pension (which again are recorded on CIS) so no automatic recalculation of the award can/will occur.

For the non-state pension income to be taken into account, the claimant would have to declare the pension payments (or a UC agent discover they have not been declared), and someone would have to work out how the pension should be treated under the law and manually recalculate any overpayment that may have occurred. I would estimate the chances of that all happening correctly as slim to very slim.

Of course this is a deficiency in the UC system that could be rectified (at some point in the future) as pension income is reported to HMRC by the pension administrator's payroll system and is available to DWP through RTI, just that the UC system is not (currently) built to automatically include pension income from RTI when calculating the UC award (unlike earned income). It's almost like DWP's attitude is we will catch up with it and recover it eventually, and is probably one of the flags that triggers a UC case review.

Catonthemoon

@Yamor (re: your post of 24 Jun 03.45)

I had also been of the opinion that s.74 was fairly cut & dried. I recently came across a question answered by Steve Webb (former Pensions Minister) & more pertinently, a Parliamentary question on this very subject, which got me thinking 🤔 

Here’s the link:

https://www.thisismoney.co.uk/money/pensions/article-14114353/Taking-NHS-pension-Universal-Credit.html?ito=native_share_article-nativemenubutton

Would you alter your opinion in any way having read this? What’s your take on it?

Cotm

Yamor

Catonthemoon said:

@Yamor (re: your post of 24 Jun 03.45)

I had also been of the opinion that s.74 was fairly cut & dried. I recently came across a question answered by Steve Webb (former Pensions Minister) & more pertinently, a Parliamentary question on this very subject, which got me thinking 🤔 

Here’s the link:

https://www.thisismoney.co.uk/money/pensions/article-14114353/Taking-NHS-pension-Universal-Credit.html?ito=native_share_article-nativemenubutton

Would you alter your opinion in any way having read this? What’s your take on it?

Cotm

I agree with all that is stated there, as a regular pension deferral means no income is actually received until the pension is claimed, and there is also no issue of notional income, due to being under pension age.

However, in this thread, the OP has been clear throughout the thread that their pension cannot be deferred in the normal manner, and if it is claimed late, they will simply receive all the money owed to them from the time they were entitled to the pension as a lump sum. This can also be seen by the fact that for tax purposes, HMRC will allow the income to be split over the various tax years.

Catonthemoon

@HillStreetBlues (re: your post on 23 Jun 7.30)

Reference Schedule 9 & your post on 13 Jun where you state “ESA regs exempt not taking a pension while under SP(C)A”.

I believe both of these concern DC pensions… the OP is asking about a DB one.
Please correct me if that’s wrong. Cotm

Yamor

Catonthemoon said:

@HillStreet (re: your post on 23 Jun 7.30)

Reference Schedule 9 & your post on 13 Jun where you state “ESA regs exempt not taking a pension while under SP(C)A”.

I believe both of these concern DC pensions… the OP is asking about a DB one.
Please correct me if that’s wrong. Cotm

The exemption is from the notional income rule (which says that income which you could apply for is taken into account even if you don't apply for it), and that applies to both DC and DB schemes.

The issue is only where a claimant does actually get the income, because they receive a back payment for the period since reaching the relevant age for the specific pension scheme in question.