Clause 7 - Fixing of claimant's retirement provision
State Pension Credit Bill [Lords]
11:30 am
Professor Steve Webb (Northavon, Liberal Democrat)
Subsection (4) deals with the way in which someone who makes a claim for pension credit will have imputations made about their income from capital for up to five years, which is the period between making claims. The innocent-looking subsection to which the amendments relate has the potential to be the administrative nightmare of the pension credit. I am grateful to the hon. Member for Hertsmere for tabling amendments on subsection (4), as they will give us the opportunity to hear from the Minister how the
process to which the probing amendments relate will work.
An individual might report an occupational pension at the start of the five-year period. The subsection says that the Government may make an assumption about what happens to income from that pension in the next five years. The assumption might be that it should rise in line with inflation. There would then be a recalculation each year, because there would have to be an annual recalculation of the pension credit anyway, as all the rates will change. The recalculation will be made on the basis of a guess as to what that occupational pension will have risen to one year on, two years on, and so on.
As soon as one says that, one realises the problem. People may have pension income from a multiplicity of sources. They will have worked for more than one employer, and may have annuity income and all sorts of private savings income. As I understand it, subsection (4) allows the Secretary of State to deem an increase for every one of those sources of income, according to the rules of the pension scheme. When people apply for the credit, in this unintrusive, bureaucracy-light or bureaucracy-free way, will they have to state the name and address of the pension provider of each pension that they receive? Will they have to stipulate the indexation rules for each pension of which they are in receipt—