Backdated Occupational Pension

Taylor2000

@Yamor said "And to further clarify, it makes no difference when the lump sum is received. Even if it is received after turning pension-age, or after the UC claim has ended for any other reason, the same rules will apply. Although in those cases it may be more likely that UC won't realise, and you 'get away' with it."

I still cannot understand this comment as you are legally entitled to defer income from a pension until SPA and do not have to apply for this. Yet you still think if the pension is claimed upon reaching SPA and the  backdated pension arrears are paid then an overpayment will still have occurred? 

@Newcad as you have previously been involved with this thread I would be interested to know what your thoughts on this are?

Yamor

Taylor2000 said:

@Yamor said "And to further clarify, it makes no difference when the lump sum is received. Even if it is received after turning pension-age, or after the UC claim has ended for any other reason, the same rules will apply. Although in those cases it may be more likely that UC won't realise, and you 'get away' with it."

I still cannot understand this comment as you are legally entitled to defer income from a pension until SPA and do not have to apply for this. Yet you still think if the pension is claimed upon reaching SPA and the  backdated pension arrears are paid then an overpayment will still have occurred? 

@Newcad as you have previously been involved with this thread I would be interested to know what your thoughts on this are?

You are legally entitled to defer pension income in the sense that they will not include the potential income as "notional income" as they would for other income you could obtain but choose not to.

However, in this situation, you are getting the income, just being paid it late, and the attribution rules mean that the income (despite being received alter) are taken into account when the payments were due.

Pension deferral therefore only works where by deferring the pension you either get higher weekly/monthly payments when you do eventually claim it, or where you get a lump sum which is calculated in some way at the point of claim based on the length of deferral, but isn't simply back pay for the period prior to making the claim.

Newcad

As I am now understanding it:-

There is a difference in "Deferring the commencent" of a workplace pension - as opposed to the 'not taking' of payments from a workplace pension that has already commenced.

 (Whether you knew that it had commenced or not. Or perhaps more to the point if you were not told that or missunderstood).

The best way I can currently think of to explain that difference is:

The first one is putting off when the pension starts paying. It hasn't started paying so there can be no question of backpayments.

The second one is putting off, or not knowing about, collecting the money that the pension should already be paying. So when the monies due are eventually paid they are backpayments from when they should have originally been paid.

Taylor2000

@Newcad thanks for your reply. So, bearing all things in mind do you think an overpayment will still have occurred if the arrears of pension are taken after SPA?

I still can't understand why this would be the case given the Reg106 rule which states you are allowed to defer a pension and don't have to apply for it when under SPA. There aren't any clauses included that cherry-pick the types of pensions that this applies to and which the DWP can then rely on to state the pension should have been applied for previously and to justify the recovery of any overpayment?

HillStreetBlues

What doesn't help is the crossover between ESA Regs & Social Security Administration Act on reaching SPA
What ESA regs ignore, the SSAA doesn't and can apply even when on ESA but only after SPA

Newcad

For years I have been understanding (or not) the government DWP benefits.

The workplace and private pensions are a whole new world of complexity.

What has gone on with  those workplace and private pensions since the early 1960's I defy anyone to work out.

The current government is trying again. No further comment.

Newcad

Taylor2000 said:
I still can't understand why this would be the case given the Reg106 rule which states you are allowed to defer a pension and don't have to apply for it when under SPA. 

Again it's a question of whether you are actually deferring commencement of the pension; or just delaying payments that are due on a pension that has already commenced.

The benefits rules allow you to defer commencement of a pension to SPA without it being classed as Notional Income.
However that can only apply if the pension schemes' own rules allow deferral.

Not all workplace pension schemes allow deferral, some have a fixed commencement date which happens anyway and cannot be deferred. (Most commonly a set birthday, often 65 or 60).

You may be able to tell the pension provider not to send you any payments yet; but that is not deferring the pension commencement.
It's saving the payments up to be drawn out later as a backpayment, ie. it's not that much different from you taking the payments each month and putting them in an account that you don't touch.

Taylor2000

I have just been having another read of the article posted by @Catonthemoon on 25/6/25

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

I noticed that one of the pensions in question is an NHS pension with a normal pension age of 60 which makes me think 1995 scheme. Therefore, it's one that will be backdated to NPA if claimed after then.

I wonder if Steve Webb's answer would have been different (i.e mentioning overpayment) had the op elaborated that the pension would be backdated? Just a thought.

Taylor2000

Just came across this post on rightsnet titled "ESA and deferred lump sum pension"

https://www.rightsnet.org.uk/forums/viewthread/20587/

Paul Treloar states "The value of an unaccessed pension pot is disregarded under the regs, the fact that the client has deferred accessing the pension pot isn’t a concern for the reasons Stainsby notes, and so when the client does receive the back-dated lump sum, the fact that it might be being paid for a past period is neither here nor there as they will be over SPA and no longer receiving ESA. It will be a capital lump sum at that point as it’s a one-off payment of occupational pension and that’s already disregarded under para.28 of Sch.9 of the ESA Regs. 

This confirms my understanding that if someone chooses to take the occupational pension at SPA and then receives a large backdated lump sum of pension payment arrears then all is good and no overpayment of ESA will have occurred.