UK Post Office Card could be costly for pensioners

Millions of pensioners could have their welfare benefits withdrawn because of a hidden means test in the Government’s flagship proposal for the new Post Office Card Account. The Tories warned last night that a loophole in the system for ending the traditional weekly cash payment could leave the elderly financially vulnerable. The Government is switching to electronic payments over the next two years and has set up the account as an option for the estimated 3.5 million benefit recipients who do not have access to banking services. Money is paid automatically into the account, from where it can be withdrawn using a bank card with a PIN number, just like regular bank accounts. But Ministers have indicated that the scheme could expose pensioners and benefit recipients to closer scrutiny of their financial affairs. Their payments could be reduced as a result. Oliver Heald, the shadow pensions minister, has written to the Department of Work and Pensions to seek assurances that account holders will not be penalised for allowing cash to accumulate. The Tories became concerned after being told in a Commons written answer by Malcolm Wicks, the new pensions minister, that “unspent income” would be subject to the rules for means-testing. Pensioners are believed to be particularly at risk. The benefit “top-ups” developed by Gordon Brown, the Chancellor, are designed to supplement the basic state pension. The extra cash is means-tested, however, and one of the areas that is closely scrutinised is a pensioner’s savings. Under the old system, any money people had left over from their state pensions, perhaps kept in a coffee tin or under a mattress, was not taken into account when assessing the recipient’s right to “top ups”. “It is important that pensioners and benefit recipients are not given the wrong impression,” Mr Heald said.