Diminution of capital with AIF

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    We have a claim where the customer went from PCGC to PCSC and AIF Including Tariff income
    We have received multiple atlas docs since 040820 (last one Dec 2023) showing the cust has excess cap over 16k from 070520 onwards (actual amount is £37731.81) but have not picked this up until now. The cust was getting PCGC until 060520, then went onto PCSC due to receiving inheritance of £37k.
    But we didn’t check the AIF and had just amended the income from PCGC to PCSC and AIF. So HB/CTR continued incorrectly with customer having cap over £16k.
    This error was flagged recently – so I have now cancelled the claim from the end of the week of the change from PCGC to PCSC and AIF – cancel reason is excess capital over £16k.
    Large HB/CTR OP created. HB OP is about £14k.
    I have classified the OP as LA error but recoverable currently, this may be changed, but first want to see if can reduce the OP caused by the excess capital.
    So I could consider diminishing cap for the resulting OP – but the level of the cap as reported by Pens Serv is £37k+ right the way through. This would mean the cap would still be in excess of £16k if we use the cap amount as reported by Pens Serv when considering diminishing cap.
    As per regs etc we have to use the capital as reported by Pens Serv, which means (as I understand) we should use the cap declared by Pens Serv all the way through the OP period and so will be no change to the OP as capital will remain over 16k even after diminishing cap is carried out using the Pens Serv capital figure.
    It is noted in CIS – the cust contacted Pens Serv Oct 2023 to advise cap has reduced as has bought a car and has given 3k to each of his children (4 children I think it is), but the CIS notes mentions a deprivation of cap decision being required – no change has been made to the PCSC /AIF as yet and as stated above, latest atlas received Dec 2023 still shows cap of £37k+

    The main query is whether we have to use the cap figure as reported by Pen Cred for the OP period – which is what I believe we should do based on the cap and Pen Cred claims guidance etc, Or do you think we need to request actual cap proof from the cust for the OP period? So to consider diminishing cap ?
    My first thought was that we have to use the cap as notified by Pens Serv, so cannot consider diminishing cap – as based on the Pens Serv notified cap amount the cust would still have excess cap over 16k if diminishing cap is calculated.
    If we were to use possible lower capital amount – if we requested actual cap proof from the cust for the OP period, how would we use the actual cap amount. As if we use amended capital – this would in theory change the AIF (which currently includes tariff income based on the £37k capital amount) and if AIF was to change the SC amount would change also. And to apply correct diminishing cap, we still use that with the income on the claim to obtain a new HB/CTR award amount and possibly reduce the OP – but if we use amended capital not as notified by Pens Serv – surely we cant use the SC and AIF figures notified by Pens Serv as we would in theory be using 2 lots of tariff income of actual cap and the tariff inc included in the AIF and also the PCSC income amount would need changing if we were to use amended AIF with actual capital?
    hope this makes sense.
    thanks in advance


    b ut surely the DWP wont update the capital regularly enough for their figures to be useful to do a diminuation calc.

    Also hard to see howe customer would know they were being overpais – did your notification letters state ” you have capital of £37k” on them?

    Customer may well have thought ” well im on pensioncredit and council are still paying me, so it must be ok”

    I think youd need actual capital figures to do the calc.

    But think its more than likely going to be a waste of time ….. if customer appeals, how are you going to explain to a judge that you didnt have any mechanism / capacity for checking the ATLAS details for over 3 years but still think its reasonable the customer would be aware they were being overpaid?

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