Reply To: Lump sum payment of defer state pension

#163672
John Smith
Participant

But surely Ward & Lister are wrong on this point?

A19/2005 states quite clearly that the disregard is for life (para 10). (It is not often that DWP circulars are clear, but on this point they are.)

HB60+ Sch 6 para 26A states that the lump sum is disregarded "only for so long as that person does not change that election in favour of an increase in pension or benefit" (my emphasis), which I read as meaning elects to refuse the lump sum and take an increased pension instead. (This "election" issue is also discussed in A19/2005.)

On W&L's view, the disregard would be meaningless, as in most instances, the payment of the deferred lump sum will be simultaneous with the commencement of the SRP. Eg, a person delays the start of their SRP for 10 years, then elects to take a lump sum in lieu of increased SRP, and commences receiving the normal rate of their SRP. The whole point of the legislation is that the lump sum is disregarded, whereas in this case, which will be almost every case, it would not be. W&L's view, with respect, simply makes no sense.