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Deprivation of capital for means tested benefits.
Cl has savings over £20k and will need to claim Income based benefits soon. Cl has been told that if she takes out a pension policy and transfers some of these funds into pension; that this would not be classed as deprivation of capital. I have found nothing that supports this. Has any one any exprerience of this?
Long standing legal authorities mean the test for deprivation is whether the monies were disposed of with “...a significant operative purpose…” to obtain, or increase, benefit.
What matters is the reason(s) for taking out the pension policy. If part of the clmt’s reasoning (it doesn’t have to be the main reason) is significantly purposeful to bring her into benefit entitlement, that would almost certainly be deprivation. However, if obtaining / increasing benefit was not a significant operative purpose behind the purchase of the policy, benefit should be payable (assuming your client is otherwise entitled).
Note that the “deprivation” provision is not discretionary - it is a judgement call by the decision making authority(ies) and such calls must be made reasonably on the balance of probability.
Can’t depart from that but note that simply knowing that benefit will be paid as a consequence of the deprivation does not, on that ground alone, make the notional capital rules bite.
Thanks. The cl is his fifties and single. If I was a decision maker I would be questioning why the person didn’t put their savings into a pension fund before being made redudant. I also have the dilemma informing clients about deprivation of capital because once they know they know.
Hold on - whilst I don’t disagree with the general thrust of Kevin and Tony’s advice here, I think the specifics do make a difference.
The value of a personal pension fund is ignored for the purposes of assessing the value of a claimant’s capital for almost all means-tested benefits - see para. 23A to Sch. 10 (IS Regs), paras. 28 and 29 to Sch. 9 (ESA Regs), para. 28 and 29 to Sch. 8 (JSA Regs), para. 32 to Sch 5 (CTB Regs) and para. 32 to Sch. 6 (HB Regs). In such circumstances, I would have thought it more difficult for a deprivation case to succeed - providing for one’s pension is a reasonable thing to do, is to be encouraged (hence the disregard) and is in a different order to the purchase of personal possessions (as in para. 10 to Sch. 10, which carries its own specific notional capital provision). How is this any different to using savings to purchase one’s own home - are there any deprivation cases where someone has done that?
If someone is in their 50s now and is being made redundant, in the current economic climate providing for one’s pension seems to me eminently sensible.
[ Edited: 31 Mar 2011 at 08:01 pm by past_caring ]In such circumstances, I cannot see how a deprivation case would succeed, regardless of the claimant’s knowledge of the capital limits and regardless of their intent. How would the purchase of a personal pension fund be any different to using the capital to purchase one’s home?
The conversion of capital that cannot be disregarded into a form that would otherwise be disregarded still constitutes deprivation IF there was “...a significant operative purpose…” to obtain benefit. This was considered in R(IS) 7/98 and I’m not aware of any contrary authorities to that principle.
In short, in the context of the legal language used for the deprivation test, if the clmt purchased the pension to reduce his capital in the expectation this would make of break a benefit claim, it would be deprivation.
Yes, original post was a little hasty, hence the edit.
Certainly the case that claimants are better off not knowing in these circumstances.
That said, in the case of redundancy, if the claimant would qualify for contribution-based JSA in the first instance, it may be that the question never gets considered…..
unless of course an HB or CTB claim also to be made. Local councils can be very touchy about the notional and deprivation thingamabob and moreso than the DWP in a lot of cases. Let me know how he your client gets on.