When a client is funded by Social Services in residential care their spouse in the community can receive 50% of any occupational pension, personal pension, or retirement annuity from the resident of the care home. If the person in the community takes up this right, how is this income viewed by pension credit?

I understand that unless it is specified as income within the act and regs it is not income, but as this is not specifically prescribed I'm suspicious that it could be viewed as spousal maintainance or income from an occupational pension scheme/private pension/Annuity, even though it is not their retirement provision.

Does anyone have any experience of any decisions under these circumstances or have an opinion on this?

Talking to our local pension service visiting officer the other day I raised this. They all felt it would be disregarded which contradicts what I thought was the old MIG rules when it should probably have been assessed as maintenance.

According to the DWP it would be treated as a voluntary payment of maintenance under reg 15 (5)(d)(iii) of State Pension Credit Regs and therefore be counted as income for the purpose of calculating the Guarantee Credit. But it would not to be treated as qualifying income, reg 9 (f) for the purposes of calculating the Savings Credit.

Many thanks

Shaun

Shaun,

I think it would be treated as maintenance. There does not seem to be a definition of "maintenance" in the PC Act or main regs. If tested to a tribunal, it might be quite difficult to distinguish this from other maintenance (maybe argue it's not maintenance as intended because there is no relationship breakdown?).

Colleagues,

Just recieved an email from the Adelphi that confirms Shaun's earlier advice that contributions from a person in permanent care to a spouse at home will count as maintenance for the purposes of GC. This seems unfair, because I suspect the legislators did not have this scenario in mind when they included maintenance in the listed income, but there you go.

Steve

I'm probably not going to be of any help with this but it is an issue I have been trying to get an answer to for some time.

Under MIG rules, I always understood that the pension paid to the spouse would be taken into account when calculating MIG.

At a liason meeting with The Pension Service we were informed that the pension given to the spouse who remained at home may be disregarded if it was intended for particular items or services not intended to be covered by PC.

No legislation was produced to back this up but I intend to give it a go when a suitable case comes up.

The case that we may try this with invloves a spouse who has Council Tax and other debts. We are going to argue that the pension given to her is intended to pay for the outstanding debts.

I will let you know the outcome

This rumour seems to currently doing the rounds, partcularly in LA social services assesment teams. The Pension Service appears to be giving the contradictory advice that this income is disregarded - I wasn't aware of any change in regs etc - can anyone give a definitive answer?

Gary - I think we've had the definitive answer already, in Shaun of Leeds' posting of 11/2/04. Steve Johnson's posting of 16/2/04 said that the Adelphi has confirmed this. Consider the wording of PC Reg 15(5)(d), which prescribes as income:

"payments made towards the maintenance of the claimant by his spouse or former spouse ... including payments made -

(i) under a court order;
(ii) under an agreement for maintenance; or
(iii) voluntarily ..."

Maintenance is not defined in the PC Act or Regs, as far as I can discover, but Chambers has it as 'the act of maintaining, supporting ...' Under 'support' it has 'supply with means of living'. No mention of legal enforcement at all; indeed, the reg itself lists 3 types of maintenance - court order, formal agreement or voluntary.

I think Steve Connell may have half a chance with a case where payments are specified as being intended to cover non-PC items, perhaps including accrued debt. Council Tax is notably not covered by PC. The problem is, if the person in care merely signs over half their income to the spouse at home with no strings, then the latter can dispose of it as they see fit, so it's likely to be considered as maintenance under reg 15(5)(d)(iii).

Jim

My thanks to everyone for your input on this issue, we have agreed with Shaun's conclusion on this for voluntary payments.

Bazaarly the only client that I am aware of that has chosen to take 50% occupational pension despite my advice that it would reduce her pension credit award has not had her award reduced! (yet)

I don't mean to throw a spanner in the works but would the client's assessed income period (if applicable) possibly protect her from deductions if the pension service did try to treat the occupational pension as income?

As the 50% occupation pension was received by her from the date of the new claim it is income that she has to declare in the original application. As it's not a change of circumstances during the AIP, it doesn't have the same protection.

Does this mean that the 50% pension recieved during the AIP does not have to be treated as a change in circs? Therefore the person who remains in the community could claim pension credit and at some stage after claiming recieves 50% pension does not need to notify Pension Service as change in circs?

Any new element of retirement provision not available at the time of the claim does not have to be disclosed and do not affect their award during the AIP.

We looked at the possibility of tactical claims for 50% of occ pension 6 months into the AIP, but felt that as it was available (and in published information provided to people upon admission to care) it would be failure to disclose.

Thanks for that, but understood from previous discussion that the 50% would be treated as voluntary mainteance, would the line of arguement realy be that you failed to apply for this as an income and therefore this could potentailly lead to an overpayment - could it really be said that faied to apply for voluntary maninytenece and if so how would this link in with the overpayment regs? Seems to be there is scope for making 'tactical' claims.

Your post raises a number of interesting points

I accept what you say about the diference between failing to claim and the voluntary nature of the 50% occ pension, but on the Pension Credit claim pack it asks if you 'expect to start getting any money in the next 12 months'. Would this be misrepresentation if they don't tick yes?

If it was misrepresentation, would it be if the resident of a care home didn't give 50% of their occ pens to their partner until after they've been resident for 12 months? How would it be viewed if this is intended from the date of admission?

Should someone's circumstances change and this change mean that they would be better off receiving 50% occ pension (taking into account HB/CTB) then that would not be misrepresentation. But I'm struggling to think a situation when this would occur unless the person did not have an AIP or it was shorter than the maximum.

Colleagues,

Good luck to anyone trying to use Steve Connell’s idea (17.2.2004) of trying to render maintenance payments invisible to the person outside care by suggesting they are for matters not covered by PC. This resonates with the disregard of charitable and voluntary payments in IS for non essential items etc. However, the IS regs allow this by disregarding these income streams. PC only counts income “that’s on the list”, and although the kind of targeted income Steve mentions is not on the list, “maintenance” is. I think Jim (5.4.2004) is right when he envisages the scenario where payments are made with “no strings”. Taking it further, even if the person in care attempted to attach strings, I reckon the payments would still count as maintenance, and fall to be counted.

The discussion started by Lucy (5.4.2004) raises the impact of maintenance income on the person at home, given that they will be subject to an AIP as part of their own PC claim. If the income is classified as maintenance, then surely there is no protection, because maintenance income does not come under the definition of “retirement provision”, so changes have to be reported as per normal.

The only way around this, would be for the income to be treated as “occupational pension” etc, which kind of brings us back to the beginning. I seem to recall that the law changed a few years ago to allow partners to apply to become members of their spouse’s pension schemes, and allow payments to be made directly. Does this only apply in divorce cases? If yes, this may be a somewhat extreme strategy to avoid the impact of income for a few years (because changes to occupational pension are ignored as they are part of the retirement provision), and would need to be planned to occur after the first 12 months of the AIP of the person out of care. I think I need to get out more…

I made this enquiry at the Pension Service recently, before seeing this thread.

The Pension Service told me that the Occupational Pension would be taken into account in full in the PC calculation only for the person in residential care.

The payments made to the spouse would be treated as a voluntary payemnt from a family member and therefore disregarded.

This seems to make sense (not that that is necessarily something to rely on!) as to do otherwise would be to 'double count' the income from the occupational pension. Both parties would then have their PC reduced by the same single income.

I sincerely hope this is the case as I passed on this advice to a county councillor.

This Old Chestnut has raised it's ugly head again with mixed messages resonating from our Local Pension Service Centre eg."Specified Income or not"," Voluntary Maintenance or not". PC Regs and DMG still unclear on issue. Does anyone have recent experience of such cases particularly where Spouse at home already awarded GPC and if later would receive 50% of Residents Occ Pension , how AIP would be affected whether or not they treated it as Specified Income ?

Hi Jim,

I don't know of any instances of your circumstances within our area.

One development we have found is that where the 50% occupational pension is not being paid to the spouse in the community it does not affect their PC entitlement. This is where the occupational pension is being paid into a joint account and Social Services are allowing 50%, the person in the community has access to this money, but is not being paid it, by the pension company or their spouse.

Can I just re-visit this one? The person in res.care if they pay 50% of occup pension to person in community - is that 50% then disregraded as income when working out Pension Credit for person in res.care home?

Hi Gary

It is my understanding that there is no disregard when calculating the resident's Pension Credit

This has come back again - local PS and acting on advice from national office is of the view that the 50% of the opccupational pension paid to the person livng at home does not count as income and therefore does not need to be declared on PC appliaction forms - apparently a lot of LA's are causing problems for Pension Service because we are advising people that this counts as income. Advice appreciated.

I'm not sure that's the correct approach. My understanding has always been that unless an income is specifically disregarded it is taken into account.

If you can't find the disregard that applies, maybe there isn't one and it should be treated as income.

I attach a letter that I received from the pension credit policy team at Quarry House last October

Your letter to ACI Division dated 25 September 2006 has been passed to myself to reply.

Your query relates to the treatment of income for Pension Credit recipients where one of a married couple or civil partnership is admitted permanently to residential care, whilst their spouse or civil partner remains in the community.

As you know, where this situation arises, it is necessary for both members of the couple to claim Pension Credit in their own right. The person in whose name the claim was made originally will simply continue to receive benefit (if still entitled) as a single person, with the change in circumstances being dealt with under the supersession rules. The other member of the couple will then need to make a claim in his or her own right. I should point out that although they are still married, they are not treated as members of the same household and are not then a “couple” for the purposes of the Pension Credit regulations.

The question of how to deal with the income of each member of the couple then arises.

As you point out, where a person is in residential care, they can elect to pass on a maximum of 50% of any occupational pension, private pension or retirement annuity contract to their spouse or civil partner. You are concerned about how this 50% of any occupational pension etc is treated in the assessment of Pension Credit for the spouse or civil partner who is not in residential care.

Our view is that where the pension provider is making payments under the scheme to the person in residential care and they elect to pay half to their spouse, such a payment received by the spouse would be a payment of income. It would not however be a payment of occupational pension etc. It is the occupational pension of the person in care, but once he has received it, it is his income. Once passed on to his spouse it is no longer an occupational pension (i.e. it is not the occupational pension of the spouse living in the community).


The types of income which affect Pension Credit are listed in the legislation. Regulation 15(5) of the State Pension Credit Regulations states:

“For the purposes of section 15(1)(j).. .income of the following descriptions is prescribed -
(d) payments made towards the maintenance of the claimant by his spouse, civil partner, former spouse or former civil partner ..., including payments made
(i) under a court order;
(ii) under an agreement for maintenance; or
(iii) voluntarily”

We would say that where a person in care makes a payment of half their occupational pension etc. to their spouse, that would be a payment towards the spouse’s maintenance, made voluntarily, and would therefore fall within the meaning of an income of a prescribed description for Pension Credit purposes.

Where the person who is not in the care home is claiming Pension Credit the income from the spouse is taken into account as income. However, this type of income does not fall within the definition of “retirement provision” as defined in section 7 of the State Pension Credit Act. As such if there is an existing AlP in force at the time the income is paid, the AlP would not be affected, as AlPs only fix a persons retirement provision. Because maintenance payments are not within the definition of retirement provision, the receipt of such payments would be a change of circumstances and would affect the person’s Pension Credit. To put it simply, such payments are outwith the operation of the AlP.

You point out that the occupational pension of the person in care could be paid directly into a bank account held jointly by the person in care and the spouse in the community. Our view would be that if the pension etc is in the name of the person in care, it remains their income, so if there is some arrangement to allow the person who is not in care to access half of this money, our view again would be that this is a payment of maintenance made voluntarily.

I agree with your point about notional income — it is up to the person in the care home whether to make the payment and as such it is a payment of maintenance made voluntarily. It would not normally be an income available to the spouse on application.

When making your “better off’ calculations you may wish to bear in mind that payment of maintenance would not count as a qualifying income for the savings credit element of the Pension Credit.

In terms of the evidence which decision makers should be requesting, I would say that they simply need to know if an amount is being paid to the spouse and how much this is. Where the money is simply being paid into a joint account, decision makers may ask to see bank statements etc confirming amounts withdrawn. Of course ultimately it is up to individual decision makers to decide such cases and to obtain whatever evidence they consider is necessary in each individual case.

I hope this reply is helpful, but if you need to discuss further, please let me know.

Many thanks

Shona, from Monmouthshire County Council, raises what appears to be a valid question...what about 'double counting'? One means-tested benefit may have already been reduced and yet another person is then being affected by exactly the same money.

Recently, local pension service said occupational pension was owned by the person receiving it and if they gave 50% to their spouse it would not affect spouse’s application for pension credit. However, several years ago pension centre said they would regard the 50% as income to the spouse in a pension credit application. More recently depending on who we spoke to in the pension centre about pension credit we got conflicting advice. Therefore decided to write and pension centre advice was:

In this instance we would treat both parties as having separate households they would both be required to apply for pension Credit as a single person(s). If prior to the move the couple held capital in a joint account then we would split the capital on both awards. However, income from Private/Occupational Pensions would remain with the person whom had the entitlement. If the person receiving the private/occ pen decided to give the income as a gift to another party then we would have to look at deprivation of income. However, once the claimant receives the income, provided that the department is taking the income into account for the award we have no interest in how the claimant decides to dispose of personal income. (For example providing relative with a share of income).

That did not seem to answer our main concern about the 50% transfer of occupational pension to the spouse remaining in the household and how it would affect their application for pension credit so we have written again seeking clarification.

I don’t see how something as important as this can be left to individual decision makers. If local pension service is not declaring 50% of transfer of an occupational pension in the pension credit application how will the individual decision makers in the pension centre even know about the income?

Yes, thats excatly the effect of this regulation i.e. taken as income for one partner, the 50% which is paid over to other partner is also treated as income - so yes there is double counting - I think it has something to do with the PC Regs when they came in,

I don't think that P/Credit is any different to Income Support in that respect - it is double counted there as well

If the person in res.care pays 50% of occup pension to person in community - that 50% then disregraded as income for housing/council tax benefit as the person who has the occup pension `owns' it.