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Working Lunch Thursday, 31 October, 2002, 14:09 GMT
Pension penalty
Working Lunch viewer Darrell Perkins
Darrell feels worse off because of his pension
When Working Lunch viewer Darrell Perkins had to retire from work with a muscle wasting condition at the age of 34, he knew there would be changes in his life.

He'd have to employ a full-time carer, make adaptations to his home and adjust to a non-working environment.

Help was at hand too, from the Independent Living Fund (ILF) - although not quite in the way he had anticipated.

The way that his entitlement is calculated means that the occupational pension he spent years saving into is counting against him.

Means tested

The ILF is a means tested discretionary trust fund, which was set up in 1993 and is financed by central government.

Its aim is to encourage disabled people to live at home independently, rather than in residential care, by helping to pay for care costing more than 200 per week.

Illogical and unfair

Disability Rights Commission
Wages of up to 395 per week can be awarded, as long as the live-in carer is not a relative.


There are conditions to this however and this is where Darrell has met with problems.

First of all, savings must be less than 16,000.

Darrell ended up spending virtually all his savings on an electronic wheelchair and modifications to his home, which would have been paid for had he saved nothing.

Secondly, under the ILF rules, any income earned from a pension (above income support level) must be used for care costs, even though any earned income from work is disregarded.

What is even more unfortunate for Darrell, is that because he has his pension as income, he is responsible for all his dental, prescription and sight test costs.

Again, with no savings or pension, all these would have automatically been paid.


The government's reason behind this is to maintain an incentive for people to get back to work - their earned income would not penalise any benefits.

Barbara Williamson of Surrey Welfare Rights Unit (part of NACAB)
Barbara: Believes changes should be made
Barbara Williamson, from the Surrey Welfare Rights Unit - a member of the National Association of Citizens Advice Bureax (NACAB) - says that in most cases, this is not even relevant:

"It doesn''t really make sense because many disabled people physically can't work - it's the infrastructure that is lacking, not the incentive".

The Disability Rights Commission also describes the situation of an occupational pension working against a disabled person as "illogical and unfair".

In effect, Darrell is being penalised because he is unable to work - if he could work, his earnings income would not taken into account in the same way his pension income is.

Darrell believes that this is a tax on disability and says it's unfair that he isn't able to spend his pension in the same way able-bodied people do when they retire.

"Things you want to do, whether socially or aspirations you've got in life, which is the reason you put the money in the pension, that's all lost," he says.


Barbara wants the government to consider disregarding at least some savings and pension income:

"Certainly there are provisions within the benefits system as it stands for some income to be partially disregarded and I think there is scope for that to be looked at. That at least would be some incentive. "

Trevor Chapman is the operations director at the ILF and while he understands the situation that many like Darrell find themselves in, he feels there is nothing his organisation can do.

He says: "Because the means test is very much based on the income support rules for calculating someone's financial circumstances, the ILF must operate under this."

The means test is very much based on the income support rules

Trevor Chapman, operations director ILF
In the early part of 2001, the Department for Work and Pensions began a review of the fund, looking at various policies and how they operated.

In its report, one item addressed was to make changes to the calculation method used for treatment of occupational pensions but in the end, it was concluded that:

"It would be inconsistent with both the broader social security system and with the Department of Health charging guides for local authority social services".

It recommended there be no change in the ILF financial assessment.


Barbara Williamson accepts that in the short term at least, it is unlikely that the situation with occupational pensions will improve.

But she is adamant that the issue of being made to pay for health benefits is something that could - and should - be targeted immediately.

Further information on the Independent Living Fund can be found on their website:

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