DWP accused of sneaking out pension cut to retired couples

Limiting pension credit access could reduce joint incomes by up to £7,000, it is claimed.

Ministers have been accused of “sneaking out” changes to state pensions which experts on Monday night said could leave some retired couples more than £7,000 a year worse off. On the eve of a crucial Brexit vote, the Department for Work and Pensions announced changes that would limit access to pension credit, a top-up for the poorest pensioners, from May.

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The change was set out in a statement by Guy Opperman, pensions minister, published on the parliamentary website on Monday evening. The change will restrict pension credit payments for couples where both are not over state pension age, currently 65 for men and women. Currently, an older couple can claim pension credit if they are “mixed age” or where one is over state pension age and one is not.

“Pension credit is designed to provide long-term support for pensioner households who are no longer economically active,” said the minister in the written statement. “It is not designed to support working-age claimants.” Mr Opperman wrote that the change would ensure that the same work incentives applied to the younger partner as applied to people of the same age. The reforms were approved by parliament in 2012.

Last year, Mr Opperman said he would implement the change once universal credit was available nationally for new claims. Steve Webb, who was a Liberal Democrat pension minister in the coalition when the reform was approved in 2012, said he had argued for measures to minimise the “cliff edge” implementation impact of the reform. He estimates the change in eligibility for pension credit could leave some couples more than £7,000 a year worse off, because the rate of pension credit is typically higher than working-age benefits.

“The change will apply for new claims made after May 15, which means that a difference of just one day in the timing of a claim could cost a couple over £7,000 in the following year, as well as putting pressure on the younger member of the couple to seek work,” said Sir Steve, director of policy with Royal London, a pension provider. “Under the proposed rules, couples where one partner is over pension age and is not expected to seek work will get the same rate as a couple where both partners are under pension age and both are expected to seek work,” he added. “People who may be affected deserve to know about this change and not have it sneaked out on a day when ministers were no doubt hoping that everyone’s attention was directed somewhere else.”

Margret Greenwood MP, Labour’s shadow work and pensions secretary, criticised the move at a time when she said “pension poverty is already on the rise”. “People who are retired on very low income should not lose out on pension credit simply because they have a younger partner,” Ms Greenwood said. “This announcement sneaked out on the eve of the Brexit vote will mean mixed-age couples are forced to claim the government’s flawed universal credit with the younger partner potentially subject to the sanctions regime.”

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The decimation of the welfare state

It’s sickening that the British welfare state is being gradually demolished by successive governments, to be eventually replaced with private healthcare insurance [1] and what’s even more galling is: they [some members of the UK govt] went to the USA to find out how to decimate our welfare state and NHS, encouraged by American corporate funders. Mo Stewart has written extensively about this in her book Cash not Care.

Amber Rudd has the absolute nerve to say Universal Credit has not always been compassionate whilst her dept have overseen the demolition of the welfare state causing misery not seen seen Victorian times [2] and I have added hundreds of  DWP atrocities like the one of Alan Chrisman [below] which have contributed to many suicides [3] 

Since 2010


Denied: How some Tennessee doctors earn big money denying disability claims

Alan Chrisman holds medical bills and records near the McDonald’s where he worked at as a maintenance employee before being diagnosed with stage 4 colorectal cancer

By the time Alan Chrisman was diagnosed with stage 4 colorectal cancer, he was too sick to work. The cancer had spread to his lungs. His doctors said he may never get better. He applied for disability, the federal safety net program he contributed to with every paycheck during his 30 years working as a stonemason.

But a doctor hired by Tennessee’s Disability Determination Services to review applications quickly concluded Chrisman wasn’t sick enough to get the $804 monthly benefit.

That physician, Dr. Thomas Thrush, is one of about 50 doctors contracted to review applications for Tennesseans seeking disability. The doctors are paid a flat rate for each application file they review. How much they earn depends on how fast they work.

Thrush, like many of the doctors who contract with the state, works very fast. In fiscal year 2018, he reviewed — on average — one case every 12 minutes.

Thrush’s productivity has paid off. He earned $420,000 for reviewing the applications of 9,088 Tennesseans applying for disability during the year ending June 30. He has made more than $2.2 million since 2013. On average, 80 percent of the cases he reviewed were denied.

6 takeaways from this investigation: Doctors speed through disability claims, make millions

Tennessee has among the highest denial rates for disability applicants in the nation, rejecting 72 percent of all claims in 2017. The national average for denials was 66 percent. Outside experts and former and current state employees say it’s impossible to review cases so quickly without making mistakes that lead to wrongful rejections of disability benefits.

In Chrisman’s case, Thrush failed to obtain one critical piece of evidence: a discharge paper from a hospital that stated Chrisman’s cancer was inoperable and had metastasized. The prognosis clearly qualified him for disability, even under the complex rules set by the Social Security Administration. The mistake was discovered only after Chrisman hired a lawyer.

A USA TODAY NETWORK – Tennessee investigation examined 5½ years of data for physicians and psychologists who review disability applications. The investigation found that between January 2013 and July 2018:

• Some doctors raced through cases. More than half of all contract physicians outpaced the federal standard of 1.5 cases per hour, and 1 out of every 5 doctors doubled that pace.

 A whistleblower was fired. The contract of a former medical consultant was terminated in 2017 after he raised concerns about some physicians reviewing a high volume of cases.

• Speed pays. Seven high-volume doctors billed for more than $1 million each between fiscal 2013 and 2018. These physicians’ annual payments range from $103,000 to $451,000. By contrast, the acting chief of the Social Security Administration, a Cabinet-level position, earned $240,000. For some physicians, this was not their sole source of income.

 Staff doctors take more time. The state employed a small number of staff doctors whose compensation is not tied to the number of cases they review. These doctors reviewed cases at a rate that is in line with federal recommendations. They typically earned less than $150,000 annually, according to the state’s salary database. Beginning this year, however, the state is terminating all doctors on salary and relying only on contract physicians.

 Some doctors have a history of misconduct. At least two doctors under contract with the state are felons, including Thrush. Two other physicians had their medical licenses placed on probation. Another physician had his license revoked twice in the past 20 years and now works on a restricted license that bars him from treating patients.

Five current and former contractors and state employees said they believe disability applicants are being wrongfully denied in an effort to process as many applications as possible. Most spoke to The Tennessean on the condition of anonymity, for fear of reprisal.

“It’s like a cash register,” said one contract physician. “From our perspective it’s unethical. From a consumer’s point of view it can be a tragedy.”

One doctor who raised the issue through official channels lost his contract. Dr. John Mather, the whistleblower, was the former chief medical officer for disability programs at the federal Social Security Administration, and worked as a contract doctor for the state after he retired.

“Who knows how many applicants for disability benefits have had their applications denied without justification,” he said.

A whistleblower

Mather said he warned James Stanfield, director for the state disability department, and Raquel Hatter, then commissioner of the Department of Human Services, in 2016 about the dangers of some doctors performing large numbers of reviews. The Human Services Department’s general counsel responded in a letter saying there was nothing illegal or fraudulent.

Mather emailed the Social Security Administration, which referred the matter to the Office of Inspector General. That office determined no investigation was warranted. Mather met with auditors at the Comptroller of the Treasury, then received no further response.

In 2017, Stanfield declined to renew Mather’s contract. “I don’t think they care about the claimant,” Mather said of administrators. “They just want to see the cases out. I don’t think they care too much about quality. People who are high producers — they are very happy to have them around.”

Current and former personnel said they were speaking up now because they want an outside investigator to review all cases to ensure individuals have not been wrongly denied.

“These findings are troubling,” Tennessee U.S. Rep. Jim Cooper said in a statement. “Physicians, especially those dealing with state and federal funds, should be careful and thorough in their work. Social Security Disability Insurance is a vital program, and we have to keep it strong.”

Alan Chrisman walks with his wife, Joyce, near the Sevierville, Tenn., McDonald’s where he worked as a maintenance employee before being diagnosed with stage 4 colorectal cancer. Chrisman applied for disability but was initally denied by a medical contractor hired by the state to review claims.

A spokesman for the Department of Human Services, which oversees the disability program in Tennessee, disputed any connection between how fast doctors review case files and their mistakes. “We have no reason to believe that doctors that average faster reviews are more prone to have errors in their reviews,” Sky Arnold said in a statement.

The Social Security Administration provided its own statistics that showed Tennessee doctors were spending on average 47 “medical minutes per case.” Patti Patterson, a spokeswoman, noted that was more than the national average of 38 minutes.

But the federal data adds the time multiple physicians spend reviewing the same case, a common occurrence when someone is claiming both a mental and physical disability requiring two different specialists. The state data analyzed by The Tennessean details each doctor’s speed.

A letter brings crushing news

For weeks, Chrisman did not feel well. Some days he would lose control of his bowels. After stonemason work became scarce, he got a job as a maintenance man at a McDonald’s in Sevierville, Tennessee, two years ago. One day in November 2017, he showed up to work at the restaurant and promptly soiled himself.

At the insistence of his wife, Joyce, he headed straight to a walk-in clinic. It was his first medical visit in a long time. The Chrismans cannot afford insurance. He was referred to a doctor, then another. The diagnosis was swift.

Chrisman had late-stage cancer of the intestine. The cancer had spread. There were two spots on his lung. A golf ball-sized tumor and about a foot of his intestine were removed in surgery.

Alan Chrisman worked as a maintenance employee at this Sevierville, Tenn., McDonald’s before being diagnosed with stage IV colorectal cancer in November 2017. He’s now on his 11th dose of chemotherapy. After his 12th next month, he will return for a scan.
Caitie McMekin/News Sentinel

Weakened by chemotherapy and radiation, emaciated after shedding 40 pounds, and in extreme discomfort with tubes protruding from his backside, Chrisman occasionally can’t sit or stand. On a good day he can walk outside to pick up a single log for the fireplace in the couple’s unheated two-bedroom cabin.

The Chrismans earned about $32,000 a year between his earnings and his wife’s $10 hourly wage cleaning laundry at a Smoky Mountain resort. The mounting medical bills and Chrisman’s lost wages devastated his wife, who tried to arrange payment plans with medical providers. Chrisman applied for disability in November 2017. The rejection letter came six months later.

“Although your therapy is currently causing you discomfort, it is expected these effects will be temporary,” said the denial letter, based on the recommendation from Thrush.

Joyce Chrisman cried when she read the letter.

Mistakes unlikely to be caught

The disability process has two layers of oversight designed to catch errors, but doctors know there is little likelihood anyone would catch a mistake in denying someone’s application.

First, a quality assurance department in Nashville spot-checks approvals and denials to make sure staff and doctors have followed procedures. Then, federal regional offices review a portion of disability applications.

Tennessee has consistently ranked high in the quality of its case reviews, averaging a 95.8 percent quality rating since 2016, said Arnold, the state spokesman. In 2017 DDS earned a Social Security Administration “Phoenix Award” for its performance.

But the state and federal offices review a tiny percentage of denied disability claims for accuracy.

By law, half of all approvals by state DDS personnel are reviewed by Social Security Administration staff — a provision meant to safeguard public funds.

The law, however, doesn’t set specific requirements for denials. As a result, the Social Security Administration reviewed fewer than 2 percent of all rejections, according to an analysis by the National Association of Social Security Claims Representatives.

“If the adjudicator is making poor decisions, if they tend towards denials, they’re just not going to be reviewed,” said Jen Burdick, an attorney with Community Legal Services of Philadelphia. She is is among advocates nationwide asking for Social Security to review more denials.

Wrongful denials may be appealed, but long delays for a hearing can take a devastating  toll in lost wages, lack of access to health care and medical bills. In fiscal year 2017, at least 9,570 people died waiting for their disability appeals to be heard.

Speed pays — sometimes millions

The Social Security Administration oversees two disability programs: Supplemental Security Income, or SSI, for low-income individuals without a work history, and Social Security Disability Insurance for workers who become disabled.

The federal government delegates to the states the administration of the programs. Tennessee received $8.5 million last year from the Social Security Administration to hire medical consultants with a variety of specialties to review medical records.

These doctors never examine claimants in person, although they occasionally order a physical exam by another doctor.

Seven days a week, setting their own schedules, the doctors swipe their badges to access secured floors of a brown and glass office building on the outskirts of downtown Nashville, logging into a computer system that generates a queue of cases to review.

Some applications contain just a few pages. Others include hundreds of pages of doctor’s notes, hospital reports, X-rays, lab results and employment records. Doctors must write a brief report to justify their findings, too.

The decision to grant or deny benefits is officially made by a state employee, but doctors who work for the state say it is their recommendation that carries the most weight.

For this work, the doctors are paid a flat fee ranging from $30 to $47 per case. Doctors also bill $68 per hour in most instances for the time they spend consulting with staff or mentoring other physicians. Use the database below to search for physicians. Like Thrush, some of these doctors work very fast.

Dr. Kanika Chaudhuri, a pediatrician, evaluated 3,872 cases last fiscal year, averaging more than four cases per hour when she worked. She earned $192,000 in fiscal 2018 and $1.1 million since 2013.

Out of all the cases Chaudhuri reviewed over the five years, 78 percent were denied, according to data provided by the state. State officials later noted that the denial data included cases in which multiple doctors made assessments, meaning Chaudhuri and other doctors may not have made the final assessment.

Asked whether she felt pressured to review cases too quickly, Chaudhuri said: “No direct pressure. They recommend that we must keep up. They always recommend you do your best. There are so many applications and so few doctors. We are overwhelmed with cases.”

Jenaan Khaleeli, a psychologist, has averaged 4½ cases an hour since 2013. Nearly 80 percent of those cases were denied. Over the five years, Khaleeli earned $1.2 million, including $209,000 in fiscal 2018.

Dr. Frank Pennington, an ear, nose and throat specialist who is also a felon, earned $144,000 reviewing cases in fiscal 2018, and more than $1 million since 2013. During the five-year period he reviewed 20,835 cases, at a rate of three per hour.

Pennington is one of five contract physicians with a history of misconduct. Pennington is confined to the administrative practice of medicine after three separate felony cocaine convictions and two stints in federal prison in the 1990s.

Thrush had his license placed on probation for four years in 2008 after he  pleaded guilty to prescription fraud in 2006. Arnold, the DHS spokesman, said the physicians were all doctors in good standing while employed.

“It’s important to remember these are not forward-facing doctors,” Arnold said. “Their role is to examine medical records and reports. They do not meet with patients in person.” Thrush, Pennington and Khaleeli did not respond to messages.

‘A flawed system’

Tennessee’s pay-by-the-case model — and the sums paid to contract doctors — surprised even advocates and attorneys who routinely assist people with disabilities. “There is an obvious financial incentive under such a payment arrangement — to process cases as quickly as possible,” said Russ Overby, an attorney with the Legal Aid Society of Middle Tennessee, who represents individuals seeking disability.

“I am concerned that some clients who are in fact eligible for disability benefits will be denied because there has not been a sufficient review of the case.” Carrie Hobbs Guiden, executive director of The Arc of Tennessee, advocates for individuals with developmental and intellectual disabilities who occasionally apply for Social Security disability benefits. Doctors have to invest the time to properly review cases, she said, especially when it involves people with untreated mental health issues.

“If they’re getting paid based on how many they get done, that’s a flawed system,” Guiden said. “That’s not encouraging quality. You have to question if the purpose is to deny as many people as possible.”

Under pressure to meet ‘workload goals’

State disability determination departments face enormous pressures to meet “workload goals” set by the Social Security Administration.

In 2018, the Social Security Administration set a goal of 103,161 disability applications to be cleared by Tennessee’s office.

The staff and consultants needed to clear those cases in Tennessee have shrunk by 24 percent between 2010 and 2016.

Failure to meet goals can result in a financial penalty from the federal government, according to Jeffrey Price, the past legislative director for the National Association of Disability Examiners.

Doctors elsewhere push back

About half of all state disability offices in the United States operate on a similar model to Tennessee’s, in which physicians reviewing applications are paid by the case, according to Price.

The contract model, in which doctors receive a fee for each assessment, introduces some risks, Price said.

“If you were paid by the case, it behooves you to sign off on as many cases as you can,” he said. “I think that model at least has the potential for increased error rates.

“A doctor can review cases effectively at about two cases per hour,” Price said. “You’re hoping that the doctor will actually look at the whole case, not just what the examiner wrote.”

Doctors like Thrush, who processed more than five cases per hour, might be valued in an office trying to shovel itself out of a large caseload, Price said, but the pace is implausible.

“I think that would be dangerous, actually,” Price said. “Inherently you would be missing something if you’re looking at five cases an hour.”

At the North Carolina Disability Determination Services office, where Price has worked for nearly 40 years, managers recently asked doctors to process an average of three cases per hour instead of two. Doctors in that office are all on staff, as opposed to contractors.

“Some of our doctors are pushing back,” Price said. “They say that’s too many.”

A rule put into place by the Social Security Administration in 2017 has made the work of DDS physicians even more critical in deciding an outcome of an application.

Previously a “treating physician rule” required DDS to give more weight to the opinions of an applicant’s personal doctor than doctors hired by DDS. That rule was eliminated, giving doctors hired by DDS more influence in deciding the outcome of applications.

‘Something needs to be done’

After Chrisman was denied, he and his wife found a lawyer in Sevierville to file a request for reconsideration.

In September, Joyce Chrisman came home from work and brought the mail inside their cabin. The letter from Social Security said, “We found that you became disabled under our rules on November 8, 2017.” That was the day after she urged Chrisman to visit the walk-in clinic.

Another physician had examined Alan Chrisman’s file and recommended he be granted disability.

“We said ‘wow,’ ” Chrisman said. “We couldn’t believe it.”

George Garrison, his lawyer, said he was troubled by The Tennessean’s findings.

“People come to me at a point they’re about to lose everything they’ve got,” he said. “They’re sick. They’re dying. They’re having to deal with a complex system.”

The benefit meant that Joyce Chrisman no longer had to worry about paying medical bills. The bills would be paid dating back to the time her husband applied for disability.

His disability approval also automatically qualified Alan Chrisman for TennCare, which is now covering his ongoing chemotherapy, medications and hospitalizations.

Chrisman sits on his couch most of the time. He’s on his 11th dose of chemotherapy. After his 12th next month, he will return for a scan. “Then we’ll go from there,” he said.

Thinking about the months he spent rejected — when he and his wife were barely scraping by — Chrisman gets angry.

“Something needs to be done,” he said. “They’re either getting too much of a caseload or they’re getting greedy.”

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Thousands of pensioners failing to claim over £1,000 a year in state benefits

Call for more information and benefits advice to be made available for pensioner homeowners.

Photo credit: garryknight via photopin cc

Thousands of pensioners are missing out on over £1,000 a year in state support by failing to claim the benefits they may be entitled to, according to a new report.

Research by Just Group found that seven in ten pensioner homeowners are failing to claim full benefit entitlements, with an average loss of £1,058 per home owner.

Pensioner homeowners on low-income are entitled to claim a range of state benefits, including pension credit and council tax reductions, but many are either not aware of their entitlement or are choosing not to claim.

But according to Just Group’s ninth annual ‘State Benefits Survey’, 49 per cent of pensioner homeowners entitled to state support are not claiming any form of benefit, while 20 per cent are claiming too little, missing out on an average £855 a year.

Just Group tracked three key benefits available to older people:

  • Guarantee Pension Credit showed the biggest unclaimed average amount at £1,889 a year.
  • Savings Pension Credit is the least likely benefit to be claimed with take-up rate of less than one in three of those eligible and an average loss of £434 a year.
  • 32% were eligible to receive Council Tax Reduction but fewer than four in 10 of those were claiming, missing out on an average £745 a year.

“Once again we have found that too many people are missing out on claiming their full benefits with the average annual loss of £1,058 a year, the highest for five years,” said Stephen Lowe, group communications director at Just Group.

“These are meaningful sums of money that would make a real difference to people’s lives, especially for those struggling to pay everyday living costs.”

WASPI women protest outside Parliament over state pension changes. 

The research has led to calls for more information and advice to be made available for older people. “The first priority of the professional adviser when meeting clients is to check their entitlement to State benefits,” said Stephen Lowe.

“Of those eligible for State support, we found around seven in 10 households were missing out, made up of 49% failing to claim anything and 20% claiming only their partial entitlement.

“The highest amount unclaimed was £5,702 a year by a couple in Cheshire aged 57 and 58 who were claiming part of their benefit entitlement but under claiming an additional £110 a week.

“Among those completely missing out on benefits, a household in Norfolk, aged 83 and 57, were eligible to claim £5,506 a year. A 93-year-old from Hertfordshire who was not claiming, was entitled to receive £5,434 a year.

“Overall, nearly one-third of those missing out were eligible to receive benefits worth £1,000 a year or more. “Of course we don’t know how long people have been missing out on benefits so in some cases the overall loss is likely to be in the tens of thousands of pounds.”

He continued: “Our research with advised clients is backed up by official government figures which show vast amounts of State benefits go unclaimed. “For the two elements of Pension Credit, it is estimated about 1.3 million families are failing to claim up to £3.5 billion a year.”

He added that the take-up rates in the Just Group research amongst advised clients are below official government estimates for the whole population, suggesting that homeowners are more likely to be missing out than tenants or non-homeowners. “It raises questions about whether homeowners are less likely to think they are eligible and therefore less likely to claim, or whether the guidance and information is not making the right impact to help people claim,” he said.

“The benefits system is not easy to navigate, perhaps highlighted by the fact that even significant numbers who are claiming are not getting their full entitlement. “It certainly reinforces the argument that State Benefits information should be included as part of the government backed free, independent and impartial financial guidance now being offered by Pension Wise to those aged 50+ who are considering accessing pension money.”

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Department for Work and Pensions postpones new nasty for poverty stricken pensioners until 2019

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The Department of Work and Pensions has put back harsh plans to change the rules for new claimants for pension credit from next June to sometime next year.

The decision not to implement savings that could lead to  tens of thousands of elderly people having to live on half the money paid out by pensioner credit is not motivated by a change of heart on a heartless measure.

It is because of incompetence and failure by the ministry itself to roll out another major benefit called universal credit – which replaces a whole series of benefits – on time. This was supposed to be nationwide by June this year. But the civil servants who planned it failed in their job – despite collecting bonuses worth £20,000 on top of six figure salaries for introducing the new benefit. You can read all about it in my blog last year here.

So now instead the benefit will not be rolled out across the country until the end of December 2018. The proposed timetable is here– and you can see which local area changes when.

Of course the department has not announced the delay to the new pension credit cuts until I contacted them to check the date. Rather like they forgot tell 3.9 million  women pensioners about the rise in the pension age until some 14 years later.

A spokesman told me:

“The timetable for the introduction of any policy changes will be determined by the roll out of universal credit – this change will not now be implemented this year.”

The measure as I reported earlier is particularly harsh if there is a big age difference between pensioner couples – with one say years younger than the other.

Previously the law said when the oldest person in a relationship reached pension age  they qualified for pension credit. Now it is being changed to the youngest person in the relationship reaching pension age. This means if there were a 10 year difference – the oldest person could get no pension credit payment until they were 76 – ten years after the raised retirement age. On person has told me of a 17 year difference – meaning one of them would wait until they were 83.

What is as shocking is the department’s disclosure to me on how the new system is planning to work. When it comes in they are proposing both people in a couple apply for universal credit when there is an age difference between the two- and only one is over 65. The change is devastating.

If you are on pension credit these are the rates (per week) for 2017 – 18 and the proposed rate for 2018-19

PENSION CREDIT
Standard minimum guarantee
single £159.35  rising to £163.00
couple £243.25   rising to £248.80
Additional amount for severe disability
single £62.45  rising to£64.30
couple (one qualifies) £62.45 rising to £64.30
couple (both qualify) £124.90 rising to  £28.60

But when you switch to Universal Credit these are the rates for 2018-19 per month:

Single claimant 25 and over £317.82
Joint claimants, either/both 25 and over £498.89

This means a couple instead of receiving £995.20 for 4 weeks would see their income halved to £498.89 a month until both of them were over, by then, 66.

Furthermore the younger person in the marriage will be subject to benefit sanctions if they fail to continually seek work. This would cut their benefit compared to pension credit by two thirds to just £313.82 a month.

Notice there are no new rates for universal credit for 2018-19 as the benefit is frozen unlike pensioner credit which rises in line with pensions. This in theory could mean the people deprived of pension credit could be forced to live on a frozen benefit for years and see their living standards fall every year.

The DWP is being generous enough to say they would not force a person over 65 to seek work and sanction them if they don’t succeed. Presumably even Mr Opperman, the pensions minister, would not want to be seen trying to force a 77 year old into a job while he or she waits for pension credit.

Frankly  this is an appalling situation and I hope Backto60 people take this up as well as demanding their pension and try and put pressure on MPs to tell the government not to go ahead next year. This is a real and sustained attack on the poorest pensioners in the country and ministers should be ashamed of thinking of implementing it.

Bodies set up to protect 12 million pensioners are not doing their job [Quelle Surprise]

Governance bodies set up to protect 12 million pensioners are not doing their job, charity claims. Review into independent governance committees should be a ‘wake-up call’ for regulator, ShareAction says.

A network of independent governance committees, established to represent the interests of 12 million UK pensioners, is failing to do its job, research by a charity promoting responsible investing has revealed.

Back in 2015, the Financial Conduct Authority introduced regulation requiring contract-based pension providers to appoint independent governance committees, or IGCs, to act in the interest of pension-holders and to ensure they are getting the best possible value for money.

The FCA at the time said that the UK had an “ageing society” and that many people lacked money for their retirement. The regulator said that, in this context, IGCs should help ensure that workplace personal pension schemes deliver value for money for members. IGCs, it said, have the responsibility to raise any concerns with the provider’s board and, if need be, escalate those concerns to the FCA.

MPs call for urgent action over erupting pensions misselling scandal

It also introduced rules requiring IGCs to publish annual reports to increase transparency and encourage comparison between providers. But a study published on Saturday by ShareAction claims that many of those reports are “vague and offer only unsubstantiated claims that savers’ interests are being protected”.

“This research should be a major wake up call for the FCA, with its mandate to make markets work well so that consumers get a fair deal,” said Catherine Howarth, chief executive of ShareAction.

“IGCs were a good idea, but the FCA made the wrong call in abandoning indefinitely its promised review of their effectiveness,” she added.

When the FCA introduced the new rules, it said that it would conduct a review of their effectiveness in 2017, two years after implementation.

In 2016, the FCA said that it reviewed them jointly with the Department for Work and Pensions and that based on the conclusions it drew at the time, it said that it had decided to defer a further review planned for the following year.

READ MORE

Ms Howarth on Saturday said that she hopes the latest study will prompt the FCA to “refocus attention on the interests of UK pension savers who remain vulnerable in a market characterised by consumer detriment and information asymmetry”.

In response to the study, the FCA said that it “remains focused on ensuring consumers are protected”.

“Through work we have already undertaken, we found that overall IGCs are acting in accordance with their terms of reference, by influencing, supporting and advancing the significant reduction in costs and charges that have been achieved,” a spokesperson for the FCA said.

The spokesperson also said that the FCA was in the process of carrying out a number of other pieces of work which impact IGCs.

“For example, we recently published a discussion paper on non-workplace pensions highlighting the role that IGCs play in workplace pension schemes, and asking for views on whether independent governance could play a role in delivering fair outcomes for non-workplace customers. We are also currently considering what form of rule changes may be appropriate to address the law commission’s 2017 proposals on pension funds and social investment,” the spokesperson said.

Shadow pensions minister Jack Dromey welcomed the report. “As highlighted in the report, members of contract-based schemes, and of all other defined contribution, bear all of the investment risk and all of the costs and charges but are not fully informed about the nature of these costs. Quite simply, those saving for their retirement are kept in the dark,” he said.

“We are also calling for the immediate resumption of the Financial Conduct Authority’s dropped review of IGCs and demand that providers, who are in the main asset managers, hand over full details of all fees and transactions voluntarily to their IGC,” he added.

The ShareAction report ranks the quality and transparency of the IGC reports of 16 of the largest UK pension providers. Aviva tops the table for the best report, followed by Legal & General, Standard Life, Scottish Widows and Royal London.

Old Mutual Wealth and BlackRock’s IGCs tie for bottom spot, behind those at ReAssure and Zurich.

A spokesperson for Old Mutual Wealth said that it was reviewing the recommendations within the report.

“The role of the Independent Governance Committee is vitally important to ensure we deliver value for money for savers in workplace defined contribution pensions. IGCs are in relatively early days and we welcome commentary on how the clarity and transparency of their reporting can be improved,” the spokesperson added.

A spokesperson for BlackRock said that its IGC annual report discloses “all relevant information to scheme members and policyholders in a transparent and straightforward manner”.

The spokesperson added that in addition to the annual report, BlackRock “continuously updates scheme members and policyholders about the service, performance and costs for their life savings on its website, which we would argue is a better benchmark for transparency than the methodology used by ShareAction”.

“We welcome efforts to promote transparency and accountability and have engaged with ShareAction on its methodology. Despite our engagement, ShareAction has chosen to solely focus on a single annual written communication in the report,” the spokesperson added.

In its review of the individual reports, ShareAction said that some of them made “vague, high-level statements on provider performance and did not back them up with detail or data”.

The charity said that it felt it would be “hard for a consumer or consumer body to understand from these reports whether scheme member interests were being protected by the IGCs, and if scheme members were getting value for money from the various providers”.

In some cases it said that it also felt that the criteria established by IGCs would not be capable of capturing potential problems that members might experience.

Generally, it concluded that both IGCs and policymakers are able to do more to protect the interests of pensions. Mostly IGCs seem to have made “a good start in holding providers to account on the value they are offering”, it said, but it added that “it is not currently clear if customers of any given provider are receiving competitive returns and paying fair charges”.

It said that the onus was now on the FCA to issue further guidance. The FCA, it urged, should set a specific definition of value for money and issue “clear, comprehensive guidance on how to assess it”.

“The widely varied standards of assessment and reporting demonstrated by IGCs show that a more standardised approach is required,” it said.

The research comes on the back of a report issued by the Work and Pensions Select Committee earlier in February calling for urgent action over what it describes as an erupting pensions mis-selling scandal affecting 2,600 British Steel Pension Scheme (BSPS) members.

The MPs said that as a result of bad advice offered to those savers, £1.1bn worth of pensions were moved out of the company’s “gold-plated” defined-benefit scheme into riskier funds with high management fees.

The MPs said that the particular circumstances surrounding the BSPS “created perfect conditions for vultures to take advantage,” but that similar bad advice on defined-benefit pension transfers may be affecting tens of thousands of people’s retirement funds in schemes across the whole of the UK.

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Benefits claimants in the hundreds of thousands are missing out on money they are entitled to

Benefits claimants in the hundreds of thousands are missing out on money they are entitled to – that’s all well and good, but as any one that has claimed benefits well knows: claiming what you are entitled to is is like trying to undo the Gordian knot and easier said than done, not to mention phoning them costs the earth, one call [I made] to the DWP cost nearly £9.00 and who can afford that? GN

Charities and financial institutions urge struggling Brits to check if they are owed financial support

It’s January. The local pub is doing a roaring trade in lime and soda but even that small outlay is too much for many of our abused bank accounts. We need all the help we can get. And yet millions of Britons are failing to claim the benefits they are full entitled to designed to make specific, financially stressful situations a little easier.

The latest figures suggest 300,000 unemployed or very low earners, for example, are missing out on support worth at least £73 a week. An investigation by the Resolution Foundation has found that those forgotten unemployed, or those on such low hours that they qualify for out-of-work support – described as  ‘on the margins of our labour market’ – are mostly older people and younger men. Individuals are able to earn up to £80 a week and still claim Jobseekers Allowance, or £116 a week under Universal Credit.

Members of this group are missing out on at least £73.10 a week (the current value of Jobseekers Allowance/standard Universal Credit allowance for those aged 25 and over). However, they could potentially be missing out on far more if they are also entitled to passported benefits such as maternity grants, energy discounts and free school meals.

David Finch, Senior Economic Analyst at the think tank, said: “Over the last twenty years, a growing number of unemployed people are not claiming unemployment benefits. “Policy makers have generally been pretty relaxed about this gap, assuming that is largely due to people finding new work very quickly, or having other sources of financial support at home.”

The report calls on the government to do more to boost benefit take-up by those in need of support, arguing that the ongoing roll-out of Universal Credit provides an opportunity to refocus on those at the margins of the labour market.

But the benefits gap isn’t restricted to those looking for work.

This week, a Freedom of Information request to the Department for Work and Pensions has found that a scheme designed to help carers of disabled people build better state pension entitlement has failed to reach 97% of its target group. Just 3,524 people claimed the national insurance credit in 2016/17, compared with a DWP estimate when the scheme was introduced that 160,000 carers could benefit.

Royal London, which submitted the request, and charity Carers UK are now calling for a more proactive approach from government to make sure that carers take up these valuable rights. Royal London estimates that each year of credits would add £237 per year to a carer’s state pension, or over £4,700 over the course of a typical twenty year retirement.  If, as estimated, more than 155,000 carers a year are missing out, that’s a total loss of more than £700m.

In 2010 the government introduced a new system of National Insurance credits to help bridge gaps in National Insurance records. It was targeted on carers who were spending at least 20 hours caring, affecting their ability to earn enough to pay National Insurance, but who were not entitled to the Carers Allowance for those doing 35 hours per week of caring, and which brings automatic credits for National Insurance.

“Caring for more than twenty hours per week has a big impact on someone’s ability to hold down a job and pay National Insurance Contributions,” says Emily Holzhausen OBE, Director of Policy and Public Affairs, Carers UK.

“The carer’s credit is a good scheme but it needs much more effective publicity.  Caring often impacts negatively on health, wellbeing and ability to work and yet carers’ contribution to the economy is worth billions a year.   They should not lose out financially in retirement as well.”

To qualify for the credit, a person aged under state pension age must be providing 20 hours per week or more of care for a disabled person who is receiving middle or highest rate disability living allowance, attendance allowance, constant attendance allowance, personal independence payment or armed forces independence payment.

Steve Webb, director of policy, Royal London said: ‘These schemes are introduced with the best of intentions, but they become no more than window-dressing if virtually nobody actually takes them up.  Governments cannot simply hope that people find the information on official websites or rely on the occasional ministerial press release.  It is time for proactive communications with those who are meant to benefit so that far more people get the help to which they are entitled’. Information on how to claim the carer’s credit can be found here. Information for carers can be found here.

Meanwhile, pensioners are just one of the wide range of other groups also missing out. Around 60% of eligible pensioner homeowners either aren’t receiving any benefit at all or are claiming but not receiving their full entitlement. The average loss for each household comes in at more than £1000 a year. Guarantee Pension Credit is a particularly under-claimed example – worth up to £8,286 a year for a single person and £12,352 for a couple

“One in three of those eligible for Guarantee Pension Credit failed to claim with an average loss of £3,431,” warned Stephen Lowe, group communications director at Just Group, which conducted the research. “All of those not claiming this benefit were missing at least £1,000 a year and in one case the loss was £8,060 a year. “Savings Pension Credit is actually the least likely benefit to be claimed with an average unclaimed value of £275 a year. Council Tax Reduction is another area of concern where fewer than half of those eligible are claiming and the average amount being lost is £491 a year.”

“The figures make clear that in a complex system people are struggling to get to grips with what State Benefits they are entitled to,” says Lowe. “It strengthens the case for making free guidance the default option for all those heading into retirement – unless they specifically opt out – and that guidance should include information about entitlements to State help.”

With 40% failing to claim, homeowners in particular may assume they aren’t entitled to significant support. “The message from our State Benefit research continues to be that homeowners struggling for income should take steps to find out what they might be entitled to,” adds Lowe. “The government website is a mine of information or you can go to Citizens Adviceand other charities who may be able to help.”

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UK government warned over sharp rise in child and pensioner poverty

Almost 400,000 more UK children and 300,000 more pensioners plunged into poverty in past four years, new study finds

Two young boys play in a rundown street
 The Joseph Rowntree Foundation report highlights the first sustained increases in child and pensioner poverty for 20 years. 

Hundreds of thousands of children and older people have been plunged into poverty in the past four years, according to a stark analysis laying bare the challenge to families trying to keep up with the cost of living in Britain.

The research from the Joseph Rowntree Foundation (JRF) found almost 400,000 more children and 300,000 more pensioners in the UK were living in poverty last year compared with 2012-13, the first sustained increases in child and pensioner poverty for 20 years. The foundation warned that decades of progress were at risk of being unravelled amid weak wage growth and rising inflation.

The thinktank urged the government to unfreeze benefits, increase training for adult workers and to embark on a more ambitious house-building programme to provide affordable homes for struggling families.

Frances O’Grady, general secretary of the TUC, seized on the report to call for the minimum wage to rise to £10 an hour and for the government to remove the cap on salaries in the public sector. “Working people are not getting a fair deal from the economy, with real wages still worth less than a decade ago,” she said.

The foundation’s latest research, titled UK Poverty 2017found a gradual increase in poverty rates over the past four years, reversing a trend of falling numbers since the mid-1990s.

About a third of children were living in families lacking the resources for their minimum needs in 1994-95 before the rate fell to 27% in 2011-12 with the help of higher employment rates and tax credits introduced under the last Labour government. The proportion of pensioners living in poverty fell from 28% to 13% over the same period.

However, poverty rates increased to 16% for pensioners and 30% for children last year, while the charity also found as many as one in five people across the UK may be in poverty – which it defines as being when someone earns less than 60% of median earnings, adjusted for size and type of household.

The JRF chief executive, Campbell Robb, said: “These worrying figures suggest that we are at a turning point in our fight against poverty. Political choices, wage stagnation and economic uncertainty mean that hundreds of thousands more people are now struggling to make ends meet.”

Recent analysis from the Institute for Fiscal Studies estimates the number of children living in poverty is set to rise to a record 5.2 million over the next five years, up from about 4 million at present. The thinktank said frozen benefits as well as the introduction of universal credit would contribute to the surge, which it said would be most profoundly felt in the most deprived parts of the country.

Tax cuts and minimum wage increases have proved beneficial to some families – as the government has raised the personal tax-free allowance and imposed a “national living wage” of £7.50 an hour – but the JRF report found the gains were outweighed by the reductions from benefit support.

Philip Hammond, the chancellor, unveiled an additional £1.5bn for reforming the rollout of universal credit, helping to cut waiting times for claimants. However, the government still plans to cut working-age benefits by nearly £12bn over the next five years.

The JRF analysis also found evidence that some families were trapped in poverty despite being in work, and were unable to progress much further. It found a rate of one in eight workers, or 3.7 million people, do not earn enough for their needs and that 40% of working-age adults living in poverty have no qualifications, making it harder to earn better pay.

Rachael Orr, head of UK programmes at Oxfam, said it was “deeply concerning” to see more evidence that having a job was not enough to escape poverty. “It’s not just working adults who are affected, but their children too, and it’s a real worry to see progress on child poverty going into reverse,” she said.

Alison Garnham, chief executive of the Child Poverty Action Group, said: “As today’s report shows, we know how to reduce child poverty in the UK – we’ve done it before. Yet at the start of a sustained rise in the rate of child poverty – bewilderingly – there is inaction. The question the report begs is why are we not investing in our children?

“Families with children have had a decade of cuts to their incomes and the damage is showing. Unless there is action now to protect the living standards of low-income families, we will pile up problems for future generations and for the UK economy.”

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