My client had an award of PC with a 5-year assessed income period from 2004-2009. She inherited a large amount of capital in 2006. She did not tell TPS that she had inherited the capital until 16 months later, in 2007. They reassessed her entitlement, ended her award and notified her that there had been an overpayment of nearly £6,000, because when the tariff income from the capital is taken into account she is no longer entitled to PC.

I am trying to establish whether there are any grounds for challenging this decision. Reg 12 of the State Pension Credit Regulations says that "An assessed income period shall end at such time as -(a) the claimant no longer satisfies a condition of entitlement to state pension credit...". Does that mean that, if an increase in income/tariff income is big enough that it would take the claimant out of entitlement to PC altogether if no AIP was in place, the AIP ends?

Can anyone clarify if entitlement can end (and an overpayment arise) during an AIP in these circumstances?

Obviously we are outside the normal time limits for appealing so if it is a recoverable overpayment then I'll consider asking them to use discretion not to recover. The client has already paid back a significant amount of the overpayment.

During the debate of the PC Act, the Minister said that even if a pensioner won the lottery during an AIP it would not affect the calculation of SPC.
The case law indicates mainly that issues arise if the facts at the date of the original decision should have put a DM on notice that an AIP was not appropriate in the circumstances (eg, pending sale of house). Other circs that can lead to the end of an AIP include ceasing to be or becoming a member of a couple, or moving into or out of residential care, but I can't see how acquiring unexpected capital does it.
Have they proved to you that she was told this was a circumstance she must disclose? I think if there is an AIP claimants would be given a list saying "these are the only changes you need to tell us about," or words to that effect.

She was not told to disclose it. In fact, she received a booklet saying that she didn't need to disclose changes in capital during the AIP. The trouble is, because this happened in 2006/07 we are outside the time limits for a 'normal' appeal so we can't simply appeal on the grounds that she didn't fail to disclose a material fact.

So I was wondering if we could get an any-time revision on grounds of error of law. But it depends on the interpretation of 12(a) of the Pension Credit, which says that the AIP ends if a claimant "no longer satisfies a condition of entitlement". I'd like to argue that "condition of entitlement" refers only to residence status etc, but TPS seem to be saying that she no longer satisfied the conditions of entitlement because her income (tariff income) was so high that she was not entitled to any PC at all when it was taken into account.

I did find a guide produced by TPS which had a hypothetical example of an AIP continuing despite a lotter win, but in that example the lottery win was 'only' £50,000 so the claimant could have still been entitled to some PC even if the capital had been taken into account.

Hi,

There is a DWP guide entitled "A detailed guide to Pension Credit for adviser and others - November 2009". You can download this from the following link: http://www.dwp.gov.uk/docs/pc10s-nov09.pdf

Page 58 of this guide states:

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. However, if their capital changes and they think they could be entitled to more Pension Credit, they can tell us and ask for their Pension Credit to be recalculated. If this happens, we will ask for details of all (non-state) pension, annuitu income, an equity release payments and capital at that point. If the total is less than the figure we have been using, their Pension Credit will go up. If the total is the same as, or more than, the figure we have been using, their Pension Credit will stay the same.

Hope this helps

Cheers

John

Under the circumstances you have given...

Capital is retirement provision under SPC Act 02, s 7(6)(c).

If a claim has retirement provision from capital it will be deeemed not to change unless it is capital that counts as having a tarriff income, in that case it may be deemed to increase or decrease in line with changes to the tarriff income rules presently £1 for every £500 or part £500 over £10,000 (£6,000 prior to 01/11/09)

Where the claimant reports a change in retirement provision which would result in the amount of SPC that the claimant is entitled to decreasing then the DM is prevented from making a supersession decision. The claimant’s retirement provision has to remain fixed until the end of the AIP. SPC Act 02, s 7(3) & (5)

An AIP of any length will end at any time at which

1. the claimant becomes a member of a couple

2. the claimant ceases to be a member of a couple

3. the claimant attains the age of 65

4. where the claimant is a member of a couple, the other member of the couple attains the age of 65

5. the claimant no longer satisfies a condition of entitlement to SPC

6. payments of an element of the claimant's retirement provision

6.1 stop temporarily or

6.2 the amounts paid are less than the amount due and as a consequence the award of SPC is superseded

7. a claimant who has no partner is provided with accommodation in a care home or an independent hospital on a permanent basis

Example

Mary claimed SPC and because her retirement provision was stable an AIP was set for 5 years. Mary’s benefit week commenced on a Monday.

Six months later on 20.7.07 Mary reported her savings had increased from £5,500 to £10,600. She also reported that from 21.7.07 she would be receiving £60 a week for providing her niece with board and lodging.

The DM does not action the increase in Mary’s savings during her AIP because this would not be a beneficial change to her retirement provision. The DM only actions the change in Mary’s other income (under the usual rules for dealing with a non retirement provision income change).

As a result of the additional income from her boarder Mary’s SPC decreased by £20 a week (after the BL disregard was applied) from Monday 23.7.07

Entitlement to Pension Credit are contained in Section 1(2) of the SPC act.

The difficulty is that this subsection then goes on to say that the person has to satisfy the rules to receive guarantee credit S2(1) or savings credit S3(1) and S3(2).

But, section 7(6)(c) of the SPC Act defines capital as retirement provision. Section 7(3) of the SPC Act is explicit in that once Pension Credit has been awarded at the start of the assessed income period, it becomes the “assessed amount” which can only be varied by the provision in Section 7(4). The change in their capital is therefore not relevant to their ongoing award and can not affect their entitlement.

To interpret regulation 12(a) as a means to end an AIP is clearly at odds with the policy intention as set out by Ian McCartney MP