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Social Security Benefits: Earnings Rules

Volume 481: debated on Monday 27 October 2008

To ask the Secretary of State for Work and Pensions whether a deferred state pension is considered notional income when calculating (a) housing and (b) council tax benefit. (228245)

A holding reply was sent on 20 October 2008.

Notional income provisions in housing benefit (HB) and council tax benefit (CTB) do not apply to state pension which is being deferred. As HB and CTB can be paid to people who are working, it was decided as a matter of policy that a person who defers their pension should not be subject to the notional income rule. This reflects the policy of encouraging people to stay in work after state retirement age if they wish to do so.

This is not the case in state pension credit, where different policy considerations apply. Deferred state pension is considered as notional income in pension credit because pension credit is intended to help people whose resources are insufficient to meet their day-to-day living expenses. Any income that is available to meet those expenses, including deferred state pension, is normally taken fully into account when working out how much benefit can be paid.

For this reason, for people who claim HB and/or CTB and are in receipt of only the savings credit element of state pension credit, the Pension, Disability and Carers Service will have taken the person's deferred state pension into account when calculating entitlement to pension credit. In these cases, the local authority must use the Pension, Disability and Carers Service's assessment of income when calculating entitlement to housing benefit and council tax benefit.

So, effectively, deferred state pension will be taken into account in these cases. We are aware of this issue and are considering options for reviewing it.