The section makes these provisions by inserting a new section 30DD into the part of the Contributions and Benefits Act that contains the rules for IB.
The new section 30DD(1) provides that where someone who is entitled to IB has income from a pension payment, which is defined by section 30DD(5) to include occupational pensions, personal pensions, and public service pensions, and that pension payment is in excess of a threshold amount of £85, provided by subsection (2), 50 per cent of the excess will be deducted when assessing IB. The new section 30DD(2) defines the amount of the threshold as £85 a week, or if the period in question is not a week the appropriate proportion as prescribed in regulations.
The new section 30DD(3) gives power to prescribe in regulations people who may not have their benefit reduced. It is intended to use this power to prescribe that people on IB who are entitled to the highest rate care component of Disability Living Allowance will not have their IB reduced.
The new section 30DD(4)(a) allows exemptions to be made. For example, the intention is to use this power to disregard payments where the pension payments are in connection with the death of a member of a scheme, or where an occupational pension scheme is in deficit or has insufficient resources to pay the full pension.
The new section 30DD(4)(b) gives the power to make regulations to assume a notional income in cases where claimants deliberately choose not to take a pension payment in order to increase or maximise their benefit.
The intention is to make similar regulations to those already in place for other benefits, including Income Support and Jobseeker’s Allowance. In the case of personal pensions, the regulations prevent any notional income being taken into account before the person is aged 60. They also provide for notional income to be assessed on the basis of information supplied by the pension provider, using tables supplied by the Government Actuary’s Department. It will allow the DSS to take into account the amount of pension income which the claimant deferred. But the amount would have to be greater than £85 a week before it would affect IB.
The new section 30DD(4)(c) enables regulations to provide that it is the aggregate amount of pension payments that will be deducted from IB if they exceed the threshold.
The new section 30DD(4)(d) provides the power to apportion pension payments into weekly payments.
For example, this will enable monthly pension payments to be converted into weekly amounts so that they can be deducted from IB on a weekly basis.
The new section 30DD(5) defines what is meant by “pension payment”. This includes payment from personal pension, occupational pension and public service schemes.
The new section 30DD(5)(b) provides the power to prescribe other types of pension, or similar, income for which a deduction may be made (as is the case for JSA).
It is intended to use the power to prescribe that permanent health insurance payments should be deducted from future IB claims. This would apply to those permanent health insurance schemes that are arranged by employers to provide for employees, where the contract of employment has ended. It would not apply to schemes used to fund normal occupational sick pay. In the same way as for occupational and personal pensions, the first £85 a week would be totally disregarded and 50% of the remainder deducted from future IB.
The power in new section 30DD(5)(c) to specify other payments would enable income to be taken into account if new products are developed which provide similar income to occupational and personal pensions or permanent health insurance.
The new section 30DD(6) provides the definition of the occupational pensions, personal pensions and public service pensions to be taken into account when assessing IB. These pensions are defined in the Pension Schemes Act 1993 and are already used for JSA purposes.
The Act provides (at Part II of Schedule 8) for any regulations concerning the definition of pension payments to be subject to affirmative resolution by both Houses of Parliament. That is to say, the regulations must be approved in draft by Parliament before being made. This is in line with the procedures for JSA.
Part II of Schedule 8 makes some minor amendments to existing legislation as a result of the Act’s provisions for IB.
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