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Uprating Order (April 2009)

Volume 487: debated on Thursday 12 February 2009

This statement explains two supplementary issues concerning payments of Invalidity Allowances to pensioners from April 2009.

The Uprating Statement on 11 December 2008 announced new rates of Invalidity Allowance for customers under pensionable age to support the alignment of the rates of Incapacity Benefit and Employment and Support Allowance.

The rates for eligible pensioners due to receive Invalidity Allowance will be increased in line with the retail price index in the usual way.

The Department subsequently wrote to pensioners eligible for an Invalidity Allowance informing them of their entitlements. However, due to a technical error, a small number were sent an entitlement notice which was incorrect.

The Pensions Disability and Carers Service will ensure that the vast majority of customers who receive an Invalidity Allowance will receive accurate payments from April 2009—and we will notify those customers who receive an inaccurate notification that this correction has been made.

This will ensure that for all of those pensioners their incomes are unaffected and the correct benefits paid.

There will be a small number for whom corrections cannot be made before April and those will be corrected as soon as possible. If an under-payment has occurred, we will ensure the payment is corrected by June, and any arrears are paid to the pensioner. If an over-payment has occurred, we will not seek recovery though we will correct the overpayment as soon as possible.

Of the 500,000 pensioners with entitlement to an Invalidity Allowance we estimate that around 45,000 people may be overpaid and around 25,000 may be underpaid, depending on their individual circumstances. We estimate that the amount of weekly overpayment will range from a minimum 5p to a maximum of £3. The maximum underpayment will be £1.80 a week.

Any arrears will be calculated and paid to customers, and we will not take any action to seek recovery of these overpayments. As the Department works through the affected cases it will write to all customers who are affected to explain their position.

As people become pensioners from April 2009, they should automatically move on to the higher rate of Invalidity Allowance. Because the Uprating Order for this year does not provide the statutory basis ordinarily needed to make these higher payments, we shall be making them on an extra-statutory basis in the coming tax year. Around 7,000 customers are affected with payments worth in total around £350,000.

Our customers will not need to take any action. The Pension, Disability and Cares Service will identify and correct cases as soon as possible and contact all of those concerned.