Thirty-Third Report - Underpayments of the State Pension

Select Committee

Public Accounts Committee HC 654 21 January 2022

Report Status Government responded

Conclusions & Recommendations 22 items (6 recs)

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Government Response (AI assessment · 21 of 22 classified)

Accepted 7

Acknowledged 8

Not Addressed 4

Rejected 2

Government response

Treasury minutes: Government response to the Committee of Public Accounts on the Thirty Third report from Session 2021-22 · published 28 Apr 2022

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Recommendations & Conclusions

2 results

20 Conclusion Rejected

Managing Public Money (A4.14) states that ‘when public sector organisations have caused injustice or hardship...

Conclusion

Managing Public Money (A4.14) states that ‘when public sector organisations have caused injustice or hardship because of maladministration or service failure, they should consider providing remedies so that, as far as reasonably possible, they restore the wronged party to the … Read more Managing Public Money (A4.14) states that ‘when public sector organisations have caused injustice or hardship because of maladministration or service failure, they should consider providing remedies so that, as far as reasonably possible, they restore the wronged party to the position that they would be in had things been done correctly’.50 The payment of a lump sum of arrears may affect the pensioner’s current or future entitlement to other benefits such as Pension Credit, housing benefit, or social care provided by local authorities. The Department told us that it remains the pensioner’s responsibility to advise the relevant authority should their circumstances and eligibility for benefits change. HM Revenue & Customs states that income tax is calculated on arrears of State Pension for the tax year in which the pensioner was entitled to receive it, and not in the year in which a lump sum is paid. Where arrears of State Pension are paid, income tax will only be due on any income that exceeds the personal allowance for the respective tax year.51 However, the Department told us it does not have a clear understanding of all financial consequences of receiving a lump sum on social care provision.52 After our 41 Q 158 42 Q 161 43 Qq 177, 178 44 Qq 108–110; C&AG’s Report, 3.3, 3.5 45 Q 111 46 Department for Work & Pensions, Annual Report and Accounts 2020–21 47 GOV.UK, State Pension underpayments: progress on cases reviewed to 30 September 2021 48 Parliament.UK, State Retirement Pensions, question for Department for Work and Pensions, UIN 56659, tabled on 15 October 2021 49 Qq 68, 69 50 GOV.UK, Managing Public Money, A.4.14 51 C&AG’s Report, para 1.15 52 Q 165–167 16 Underpayments of the State Pension evidence session the Department wrote to us explaining how pensions arrears would affect adult social care provision, benefit entitlement and tax. Specifically, on social care, the Department confirmed that the responsibility to interpret the corresponding regulations sits Show less

Government Response Summary

The government disagrees with the Committee’s recommendation and does not intend to change the current legislative position, asserting it is a long-standing principle of personal responsibility for social care in England.

HM Treasury

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21 Recommendation Rejected

Some of those who contacted the Department prior to the LEAP exercise starting in January...

Recommendation

Some of those who contacted the Department prior to the LEAP exercise starting in January 2021 received special payments of interest on top of their underpayment.54 The Department chose to stop paying interest on arrears, citing value-for-money considerations and comparability … Read more

Government Response Summary

The government disagrees with the recommendation to establish the full extent of the impact on pensioners of receiving a lump sum of arrears of benefit, particularly for larger sums of arrears, and to seek assurance from local authorities that people are not treated prejudicially compared to how they would have been treated had they received the money over their proper period of entitlement, citing existing regulations and the principle of personal responsibility for social care.

HM Treasury

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