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Forum Home  →  Discussion  →  Universal credit administration  →  Thread

UC and Service Attributable Pensions

JenKelly
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Welfare Benefits Executive - Royal Air Force Benevolent Fund

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Hi all,

I’ve got a UC question, and am hoping someone might be able to help!

It’s to do with income, and whether a non-taxable Service Attributable Pension (SAP), payable under the Armed Forces Attributable Benefits Scheme, counts as income.

Under legacy benefits, a SAP is treated the same as a War Pension for the purposes of the LA discretionary disregard for HB. As we know War Pensions are definitely disregarded for UC, I am hoping that a SAP will follow suit. However, I wondered whether anyone has any experience of this situation, which they are willing to share, to give some actual practical cases to make me feel more confident about advising on this?

My worry is that it may be treated as ‘retirement pension income’ (ie ‘income from an occupational pension scheme’), even though it is not an occupational pension in the normal sense of the term.

Any thoughts?

Many thanks for any help!
Jen

Ianb
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Macmillan benefits team, Citizens Advice Bristol

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https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/778262/admh5.pdf See H5002
If it’s not listed it’s ignored.

However
“Occupational pensions
H5010 Income from occupational pension schemes should be taken fully into account. This includes any payment (other than a payment ordered by a court or made in settlement of a claim) made by or on behalf of a former employer on account of early retirement on grounds of ill health or disability.”

I am not clear whether SAP would be captured by this.

Daphne
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I did some training for the Veteran’s service a while back and they confirmed that the SAP is an occupational pension - paid if you’re medically retired from Forces and not a compensation payment like the Armed Forces Compensation Scheme.  Also I understand it’s only tax free where the primary invaliding condition is accepted as service caused/related.

SAP is treated as an occupational pension under contributory ESA and my understanding is that it is treated as an occupational pension for UC and therefore taken into account.

Reg 16 of the of the SPC Regs - http://www.legislation.gov.uk/uksi/2002/1792/regulation/16 - (which reg 67 of UC regs refers to) clarifies that pension income includes those paid on account of early retirement on ground of ill-health and disability

But I would be interested to know what others think

JenKelly
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Welfare Benefits Executive - Royal Air Force Benevolent Fund

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Thanks both.

I am hoping a SAP won’t be covered by this occupational pension provision, as it is paid because of time in service (ie the invaliding condition is service caused/related) (so, similar to a War Pension), not because of general ill-health or disability.

I have made some further enquiries, and will let you know if I get anything concrete!

Many thanks for your thoughts.

Jen

TC@BWC
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VC's, BWC, London

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Hi Jen,

what was the outcome of your case please as I have a similar case.

JenKelly
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Welfare Benefits Executive - Royal Air Force Benevolent Fund

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Hi there,

I am still waiting to get anything concrete…

We have had some cases where clients have been in receipt of a Service Attributable Pension which has been disregarded for UC purposes, however we cannot seem to get anything in writing to say that this is definitely what should happen in every case. Therefore, I am wary of advising on this when the client could stand to lose out if it is not disregarded.

We have asked the question of the DWP and have been told that this is being looked into, and that we will get a response in due course. I will update on here if we get anything concrete. If anyone else hears anything related to this please do let me know!

Jen

TC@BWC
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Hi Jen,

many thanks for getting back to me. That must be very frustrating for you as presumably you get quite a few of these cases. I would be interested to hear what eventually comes back from DWP.

Regards

Tracy

JenKelly
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Welfare Benefits Executive - Royal Air Force Benevolent Fund

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Hi Tracy,

It is very frustrating!

We are going to keep chasing though, and hopefully at some point will get something we (and others) can rely on.

Fingers crossed :-)

Jen

csmk
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Welfare Benefits Specialist, Frenkel Topping

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Hi JenKelly, did you manage to get a response from DWP on this issue? Also have a client we need to figure out if the SAP is disregarded or not.

JenKelly
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Hi there,

Unfortunately not yet no. And given the current situation I am not overly hopeful of getting anything particularly soon.

Sorry, I realise that this isn’t the answer you were hoping for!

Therefore, I am still wary of advising on this when the client could stand to lose out if it is not disregarded for UC.

However, if a client has no option but to claim UC, and if a SAP is being treated as income in this situation, I think it’s worth a challenge. They would need the documents to show it is attributable and tax free, and if they don’t have these they can write to JPAC and ask them to confirm whether it is an attributable pension and whether it is tax free, and in my experience (albeit pre coronavirus), JPAC were pretty quick to respond. The address, should it be useful, is: Joint Personnel Administration Centre (JPAC), Mail Point 480, Kentigern House, 65 Brown Street, Glasgow, G2 8EX.

I will update on here if we find out anything concrete either way.

Thanks,
Jen

csmk
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Hi Jen, Thanks very much for the update, that’s really helpful even if you haven’t had a response either way yet. I’ve been poring through a lot of research on this and it still isn’t much clearer! Fortunately, my client will still be entitled to UC even with the SAP included, so if we get a decision before yourself (somehow) then I’ll post back here myself. Thanks again!

JenKelly
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Hi all,

I just responded to a message about this, so thought I would update this thread as well.

We have recently made some progress on this issue. My colleague managed to get a contact at the DWP, and they have told us that the ADM guide in relation to Service Attributable Pensions and UC has been updated internally (ADM Chapter H5: unearned income - https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/932332/admh5.pdf). We were however told that the online ADM could not be updated until March 2021, meaning we can’t actually see this update yet. This internal update is meant to be the below note under para H5010:


H5010 Income from occupational pension schemes should be taken fully into account1. This includes any payment (other than a payment ordered by a court or made in settlement of a claim) made by or on behalf of a former employer on account of early retirement on grounds of ill health or disability2.

Note: Service Attributable Pensions and attributable Service Invalidity Pensions which are non-taxable are not taken into account as income for UC.


However, to complicate things, when I just went to look at said ADM, para H5010, there is now a different note underneath:


H5010 Income from occupational pension schemes should be taken fully into account1. This includes any payment (other than a payment ordered by a court or made in settlement of a claim) made by or on behalf of a former employer on account of early retirement on grounds of ill health or disability2.

Note: A Service Invalidity Pension (SIP) is a pension awarded to members of the armed forces who are discharged on medical grounds. These replaced the War Pension Scheme from 6.4.05 and are not taxable. SIPs are not occupational pensions and are not taken into account. Armed Forces Pensions are based on years of service and are occupational pensions. They should be taken into account as explained at ADM H5011 et seq.


I am unsure when this note was added, and whether this is in addition to the update we were told about (the first note I mention above), or whether this is a replacement of this update (in which case we haven’t been informed about this!).


However, either way, it does look positive, albeit not concrete as to what the ADM does/will say!


Also, an appeal case I had regarding this issue was recently revised by the DWP (so, they were treating her SAP as income, and while the appeal was pending they changed their minds, and agreed that her SAP should be disregarded). Which again is positive.

I hope this is helpful, and let’s see whether there are any further updates to the ADM in March!

Jen

Charles
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If it’s helpful, Chapter H5 was updated to include the note you mention on 3rd November.

JenKelly
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Hi all,

It’s just been brought to my attention that the ADM guide in relation to Service Attributable Pensions and UC has been updated online, as we were informed it would be (ADM Chapter H5: unearned income - https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/932332/admh5.pdf).

It now says:


Occupational pensions

H5010 Income from occupational pension schemes should be taken fully into account1. This includes any payment (other than a payment ordered by a court or made in settlement of a claim) made by or on behalf of a former employer on account of early retirement on grounds of ill health or disability2.

Note: Service Attributable Pensions and attributable Service Invalidity Pensions which are non-taxable are not taken into account as income for UC.


So this seems pretty clear now! I hope this helps.

Jen