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Pensioners: Social security benefits

Volume 498: debated on Thursday 29 October 2009

To ask the Secretary of State for Work and Pensions pursuant to the answer of 21 July 2009, Official Report, column 1321W, on pensioners: social security benefits, if she will update her estimate based upon the rate of capital disregard to be introduced in November 2009. (296540)

The following table shows the estimated cost of assuming different illustrative Bank of England rates of around 0.5 per cent. and 5 per cent. (averaged over a year), with and without the £10,000 capital disregard for pension credit, housing benefit and council tax benefit.

Estimated annual cost of tariff income set at approximately 1 per cent. higher than Bank of England base rate for pension credit, housing benefit and council tax benefit (2009-10 prices)

Illustrative BoE rate (percentage)

Rate applied to income above the disregard (percentage)

(i) Cost keeping current disregard (£ million)

(ii) Cost removing current disregard (£ million)










1. These estimates have been calculated using the Policy Simulation Model (PSM) which uses data from the Family Resources Survey (FRS). Estimates are subject to sampling and modelling uncertainty.

2. Estimates are given for two possible average rates to illustrate their sensitivity to actual Bank of England base rates.

3. Income taken into account is rounded up to the next £1.

4. In column (i) the interest rate is applied to capital above the capital disregard.

5. Estimates do not include the cost of applying the rules to those in care/nursing homes.

6. Costs have been rounded to the nearest £10 million.