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DHSS Rewards Pension Saving 7 September 2006

The Department of Health and Social Security’s Social Security Division is pleased to announce that certain people aged 60 years and above who receive income support will see their benefit increase by up to £10 per week from October 2006.

Income Support, which is administered by the DHSS, ensures that the Island’s pensioners (and certain others) have a minimum weekly income.

Entitlement to income support is determined by comparing a person’s income, including their partner’s income (if they have one), against their “applicable amount”- that is the amount (prescribed in law) that a person in their circumstances needs to live on.

A pensioner’s income will usually consist of their State Retirement Pension and may also include an occupational pension or a personal pension by way of an annuity. Until now, all of this income has been taken into account when assessing entitlement to income support.

However, from 2nd October 2006, up to £10 per week of a pensioner’s “additional pension” income will be ignored when assessing entitlement to income support. Additional pension income includes: State Additional Pension (entitlement to which has been built up through the State Earnings-Related Pension Scheme, SERPS, or since 6th April 2002, State Second Pension), State Graduated Retirement Benefit, an occupational (employer’s) pension or income from a personal pension plan by way of an annuity.

Steve Rodan MHK, Minister for Health and Social Security said,

“An important policy of the Department is to encourage people to make provision for their retirement and to reward those who have done so. It is fundamentally unfair that those who need income support to enable them to maintain a reasonable standard of living, have a reduced entitlement due to their additional pension provision, for which they have paid during their working lives. The result of this is that they end up with the same amount of benefit as a person in similar circumstances who has made no such provision. The introduction of this new disregard of up to £10 per week is the first step in rewarding those who have endeavoured to provide for themselves and will send a clear message to the current workforce that saving for their retirement is worthwhile.”

Around 1,500 people, aged at least 60 years, resident on the Island currently receive income support. The DHSS has established that 930 of them currently have additional pension income. Of those 930 people, 550 have additional pension income of at least £10 per week. Therefore, from 2nd October 2006, the income support entitlement of those 550 people will go up by £10 per week. The remaining 380, who have additional pension income of less than £10 per week, will see the weekly rate of their income support increase by the amount of their additional pension, as all of that pension will be ignored in assessing their entitlement.

This measure will also affect some pensioners whose income is currently just above the income support thresholds. If their income includes additional pension provision, then they may become entitled to some benefit. Whilst their income support entitlement may only be a few pounds a week, it would also give them entitlement to the annual lump-sum payment, known as the Winter Bonus, paid by the DHSS in January each year. This has been set at £300 for January 2007.

The Department of Health and Social Security would like to encourage those people aged 60 or over not currently receiving income support, who believe they may be eligible from 2nd October, to contact the Income Support Unit by telephoning 687020 or by e-mailing before that date.

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