Aggregation
Section 5: Income and capital of claimant, spouse etc.
97.Section 5 provides that any income or capital of the claimant’s partner, whether or not they are married, is treated as the income or capital of the claimant for the purposes of the Pension Credit income assessment. This includes the assessment of the guarantee credit (at section 2) and the savings credit (at section 3). In effect this means that the income of a couple, whether married or unmarried, is added together for the purposes of calculating how much Pension Credit they will receive.
98.This will be the case except in circumstances to be prescribed by the Secretary of State in regulations. There are no immediate plans to use this power to make regulations. A corresponding power exists in relation to Income Support and is replicated here in order to provide sufficient flexibility for the future. If this power were to be used, the effect of not aggregating a couple’s income or capital would be to disregard totally the income or capital of the claimant’s partner.
Sections 6 to 10: Retirement provision
99.The social security system requires a claimant to notify benefits administrators of any changes that affect his benefit entitlement. In the case of Pension Credit, this would include any change in income that is taken into account when calculating the rate of Pension Credit. Sections 6 to 10 provide for certain types of income (a person’s “retirement provision”) to be treated as remaining the same for a period of up to five years (“the assessed income period”). This is subject to routine adjustment for inflation. The effect of this provision is that increases in income do not affect Pension Credit entitlement and therefore do not have to be reported by the claimant during that period. However this does not prevent an increase in the rate of Pension Credit where a person’s actual retirement provision is reduced.
100.A person's retirement provision is any income from a pension (other than one payable under the Social Security Contributions and Benefits Act 1992 or the Social Security Contributions and Benefits (Northern Ireland) Act 1992), an annuity or capital (see section 7(6)). Income from a particular source is referred to as an "element" of retirement provision.
Section 6: Duty to specify assessed income period
101.The system in sections 6 to 10 can only be used once a claimant attains age 65 or the claimant's spouse or partner attains that age (see subsections (3)(c) and (4)(c)).
102.If the Secretary of State makes a decision on the claimant's entitlement to Pension Credit and Pension Credit is payable, he must specify an assessed income period in relation to the claimant (see subsections (1), (3) and (4) and also the exceptions in subsections (2) and (3)(d) and section 9(2)). The decision might be the first decision made in relation to the claimant, or it might be a decision revising or superseding an earlier decision (see subsection (3)(b) and sections 8(1), 9 and 10 of the Social Security Act 1998), including a decision on appeal that Pension Credit is payable (subsections (4) and (5)).
Section 7: Fixing of claimant’s retirement provision for assessed income period
103.Specifying an assessed income period has the effect of fixing, for that period, what is to be treated as an element of the claimant's retirement provision (see subsection (3)). Further elements of retirement provision acquired later in the assessed income period are simply disregarded (see subsection (5)). The claimant need not, therefore, report such a further element during the period.
104.Specifying a period also fixes the amount the claimant receives from each element of his retirement provision (the "assessed amount"), but those assessed amounts are liable to be adjusted in accordance with regulations (seesubsections (3) and (4)). The intention is that the regulations will provide for the amount of income from a pension or annuity to be deemed to increase from time to time. This will be in line with the terms of a claimant's pension or annuity arrangements or, if these details cannot be supplied, in line with the uprating of social security benefits. The regulations will also provide for the rate of assumed income from capital to be treated as adjusted from time to time. In some cases, the assessed amount may be deemed to stay the same.
105.The amounts a claimant is deemed to receive and the amounts actually received may differ. If that works in the claimant's favour, he need not report it during the period. The point of subsection (3) is that a calculation based on deemed amounts is not to be treated as giving rise to an overpayment. If the difference works against the claimant, he may seek a new decision on the amount of his entitlement (see section 8(1)(a) and (b)).
106.None of the powers in the Act will affect the powers in section 9 of the Social Security Act 1998 which allow the revision of a decision.
Section 8: Fresh determinations increasing claimant’s entitlement
107.The existence of an assessed income period does not prevent a fresh determination of any element of the claimant's retirement provision if it is freshly determined under section 10 of the Social Security Act 1998 and the effect of the fresh determination is to increase his Pension Credit entitlement. There can also be a fresh determination where the supersession decision under section 10 reduces Pension Credit entitlement but the reduction is less than it would have been because another change of circumstances has also been brought into account.
108.Where there is a fresh determination of any element of retirement provision, that determination applies for the remainder of the assessed income period (subject to any further application of section 8).
109.The result is that if a claimant wants the Secretary of State to look again at his pension credit entitlement because, for example, part of his retirement provision has gone or yields him less income, section 8 allows the Secretary of State to make a supersession decision under section 10 of the Social Security Act 1998 without interrupting or terminating the assessed income period.
Section 9: Duration of assessed income period
110.The Secretary of State will not always specify an assessed income period and sometimes he may specify a period of less than five years. This happens if he considers, looking at the claimant's circumstances for the 12 months following the day on which the decision on entitlement takes effect, that the elements of the claimant's retirement provision and their amounts on that day are not likely to be typical (see subsections (1) and (2)). Foreseeable increases in retirement provision (of the sort dealt with in section 7(4)) would not be treated as making a claimant's retirement provision atypical (see subsection (3)).
111.An assessed income period may end prematurely. Under subsection (4) it will end if:
the claimant marries or becomes a member of an unmarried couple;
the claimant ceases to be a member of a couple, by divorce, separation or death;
the claimant reaches 65 or, if the claimant is a member of a couple, the other member reaches 65.
The Secretary of State may by regulations create exceptions to the general rule in subsection (4). There is no present intention of using that regulation-making power, but the power gives future flexibility. Subsection (5) allows the Secretary of State to make regulations setting out other cases in which the assessed income period will be brought to an end. The power under subsection (5) may be used for cases where a person ceases to satisfy the conditions of entitlement to Pension Credit or where a person goes into residential care. It should be noted that bringing the assessed income period to an end does not necessarily entail bringing a person’s entitlement to Pension Credit to an end.
Section 10: Effect of variations under section 7(4)
112.The provision in section 10 resembles the routine adjustment provisions in sections 159 and 159A of the Social Security Administration Act 1992. Unlike those sections, which are open-ended, this provision operates only while an assessed income period is in force (see subsection (1)).
113.Any adjustment in the assessed amount of a claimant's retirement provision which is made by regulations under section 7(4) can give rise to an increase or reduction in the claimant's Pension Credit (see subsection (2)). If there is no net effect, a claimant's Pension Credit simply continues at the same amount (see subsection (3)). In any case, there is no need for a new decision by the Secretary of State and there is continuity in the claimant's entitlement to Pension Credit.