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Incapacity Benefit

Volume 401: debated on Tuesday 18 March 2003

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To ask the Secretary of State for Work and Pensions (1) what action he is taking to review (a) the starting point and (b) the tapered relief for set-off of occupational pension income against incapacity benefit; [101722](2) how many individuals who would otherwise qualify for incapacity benefit are affected by

(a) whole and (b) partial withdrawal of benefit owing to their receipt of an occupational pension; and what the total annual benefit foregone from this clawback was in each of the last three years. [101723]

Incapacity benefit (IB) is intended to provide a measure of income replacement for sick and disabled people of working age. We believe it is therefore right to take some account of their occupational or personal pensions as they provide income replacements.If a person claiming IB receives an occupational pension, personal pension or payments through a permanent health insurance scheme of £85 per week or more, their IB is reduced by half the amount which exceeds £85. These rules came into force for new claims after April 2001.While we have no plans at present to change the threshold at which income from an occupational and personal pension is taken into account in assessing IB, we keep all social security rules under review.We estimate that the reduction in expenditure on IB due to the rules on offsetting personal and occupational pensions was £10 million in the year to March 2002.

Note:

The estimate is rounded to the nearest £10 million and excludes the impact of offsetting reductions in the income-related benefits.

Source:

5 per cent, sample of the incapacity benefit computer system, which exclude a small number of cases held clerically.

The available information is in the table.

The number of new awards of IB since April 2001 which are reduced or stopped due to a personal or occupational pension

New awards from 6 April 2001 to 31 March 2002

New awards from 1 April 2002 to 31 August 2002

Number

Average amount of reduction

1

Number

Average amount of reduction

1

Reduced13,30024.424,40021.58
Stopped4,40062.971,50056.61
Total17,60033.965,80030.46

1 Amount of reduction current at either the end of the spell or 31 August 2002 for spells continuing.

Notes:

1. Numbers are rounded to the nearest hundred.

2. Figures are based on 5 per cent. samples and are therefore subject to a degree of sampling variation.

3. Figures may not sum due to rounding.

Source:

5 per cent. samples of the incapacity benefit computer system, which excludes a small number of cases held clerically.