Rod Stewart tax, deferred SRP and notional income

Basic facts:

- working age couple currently on ESA(ir) and max HB, Penny is the ESA claimant
- Rod will reach SPC age in next few weeks
- If Rod takes his SRP immediately, income will probably exceed ESA applicable amount even with pensioner premium because Penny is on ESA(c) and Rod will have some occupational pension
- HB would then terminate because no longer under working age regs
- Their income will be too high for UC, but not so high that they woudn’t have qualified for some HB under the HB(SPC) Regs ... but those Regs can no longer apply to new mixed age couples so tough luck

Rod is considering deferring his SRP to avoid Penny losing her ESA(ir) and passported working age HB. But would SRP be treated as notional income? Looking at Reg 106 and unsure how it applies.  My (slightly old) CPAG handbook is quite vague about this too, simply says notional income may be an issue.

On the one hand, paragraphs (3) and (4) make specific provision for occupational and personal pensions to be counted as notional income but they are silent about SRP.  Does this silence suggest SRP is not treated as notional income?  Or would deferred SRP be covered by the generality of para (2) as income available on application?

I tried to glean a policy intention by looking at other benefits, but they are not “joined up” in this regard.  HB does not count deferred SRP as notional income, whereas SPC does.  So I am not sure how that helps to interpret the ESA regs! 

I think not claimign State Pension is caught by regulation 106(2) of the ESA Regs 2008.

Apart from a list of specified trusts and benefits, this holds that “income which would become available to the claimant upon application being made but which has not been acquired by the claimant is to be treated as possessed by the claimant but only from the date on which it could be expected to be acquired were anapplication made”

The commentary in Sweet on Maxwell on the equivalent provisions under IS Regs suggests that anything that isn’t listed in terms of social security is therefore caught by this regulation.

Simplifying, the way it works is that if you defer when getting state benefits, your benefit does not reduce but you don’t acquire any later increase in SRP either.

Yes, I think I’ve changed my mind, I was getting confused with PC.

Thanks fellas.  This is actually a real life case another RN member PM’d me about so useful to have your input.

Hi, interesting post.  I would be interested in your opinions on this scenario -
A claimant is receiving 2 private pensions only (and qualifies for HB).  He then becomes a pensioner and receives his SRP, which reduces his HB award.  He then informs the pension service that he wants to defer his SRP (which they do) and so we remove his SRP from the HB calculation, and his HB entitlement increases accordingly.  I’m confused why this would not amount to a deprivation and, I’m also puzzled why the SRP deferral would be more beneficial than receiving it and paying the shortfall in his rent / HB award, rather than accepting a reduced HB award.

No idea about the policy intention but it’s pretty clear in the HB (Persons who have attained the qualifying age for state pension credit) Regulations 2006, at reg.41(2) and (3) that the following are not treated as notional income:

(2) Paragraph (1)(a) shall not apply to the following where entitlement has been deferred—

(a)in the case of a Category A or Category B pension, in the circumstances specified in section 55(3) of the Act;
(b)in the case of a shared additional pension, in the circumstances specified in section 55C(3) of the Act;
(c)in the case of graduated retirement benefit, in the circumstances specified in section 36(4) and (4A) of the National Insurance Act 1965.

HB is not included in the list of benefits that stop SRP entitlement increasing during deferment, those are:
Income Support
Pension Credit
Employment and Support Allowance (income-related)
Jobseeker’s Allowance (income-based)
Universal Credit
Carer’s Allowance
Incapacity Benefit
Severe Disablement Allowance
Widow’s Pension
Widowed Parent’s Allowance
Unemployability Supplement

Because of the way that deferment rule change works, there is no notional income considered.

Of course, when the increased SRP is taken, HB will be reduced by more.