e-mail Paul Lewis on paul@deadline.demon.co.uk
Around three million people will be worse off as a result of changes to social security which were announced after the Budget in November. The details were buried away in the small print but the changes, which will be phased in over three years, will save more than £650 million a year when they are fully in place in 1999/2000. Some of them, especially those affecting older people, can be avoided if you take action early this year. If you do not then you could end up one of the three million losers.
Backdating
From April 1997 the rules on backdating benefits will be changed. In future benefits will only be backdated for a maximum of three months. That will particularly affect pensions and other allowances which can at the moment be backdated for up to a year. For example, a woman who delays claiming her retirement pension until her 61st birthday can still get all the pension she missed for the 52 weeks before she made the claim. But the new rule will restrict the backdating to 13 weeks before she made the claim. If she is entitled to a full retirement pension, which will be £62.45 a week from April 7, that loss of 39 weeks backdating will cost her £2435. So if you are already over pension age and you think you may be entitled to a retirement pension but have not claimed yet, then claim now. The Government says that the change will cut £24 million a year off the payments to 35,000 pensioners. Make sure it isn't you!
Most of the people who do not realise they have a pension entitlement are married women. The reduced contributions which many married women used to pay do not count towards a pension. But many women did pay full contributions before they got married and sometimes afterwards and these are often enough for a small pension. So if you have worked and paid full national insurance contributions during your working life and you are over 60 (or 65 if you are a man) you should make sure you claim your retirement pension before August 1997 (that is when the backdating rule changes for retirement pension; for other benefits it is April). If you delay you will get much less backdating.
Some complexities
Unfortunately retirement pension is subject to very complex rules which are often misunderstood. A married woman can claim a retirement pension by two routes. She can get a pension on her own national insurance contributions. And she can get one on her husband's contributions. These are not two separate pensions, they are just two ways to get the same pension. She just gets whichever gives her the higher amount. So if you are a married woman and you already get a retirement pension on your husband's contributions then claiming your own pension may not achieve anything. You will only get more money if your pension is worth more than the pension paid on your husband's contributions.
Second, if you do not claim your retirement pension at pension age the pension you get when you do claim will be increased. You will get an extra 1pc for each seven weeks you delay after your birthday up to the age of 65 (70 for a man). Reasonably enough you cannot get this increase for the same period you are paid any backdating. So when the rules change you will get less backdating but more increments.
Carers
Another benefit affected by the change in backdating is invalid care allowance. This benefit is paid to anyone who spends at least 35 hours a week looking after someone else who is severely disabled. The disabled person must get either attendance allowance or disability living allowance care component at the higher or middle rate. At one time wives were excluded from claiming this allowance. But not any more - they can claim equally with anyone else. You can claim at any age but invalid care allowance is not paid on top of a retirement pension.
Many carers do not know about this benefit and do not claim it until some time after they start to care. At the moment if a claim is made late the allowance can be backdated for up to a year. But from April 1997 that will be reduced to three months. So someone who claims a year late will lose nine months' money. At £37.35 a week that will cost them £1456. The Government estimates that 35,000 carers a year will lose £20 million as a result of this change. So claim now if you think you may be entitled.
Other benefits
Widows will also lose more than £2000 if they claim their widows benefit more than three months late. The current maximum backdating of one year will be reduced to three months in April. the Department of Social Security says that very few widows do claim late but just after a bereavement is that last time to think of all these complexities. So if you know someone who is widowed before April make sure they claim in time. Mothers will be hit too as the period of backdating of child benefit is reduced from six months to three, costing some new mums £222 in lost payments. Also affected will be incapacity benefit and severe disablement allowance. Normally those benefits are backdated for one month but can be paid for up to a year if there are good reasons for the claim being made late. In future they will normally be backdated for three months but with no provision for a longer period even for a good reason. A similar change will affect means-tested benefits. They are normally paid just from the date of the claim but can be backdated where the claim was late for a good reason. That concession ends in April.
Where circumstances change and someone who is getting a benefit asks for the amount to be reviewed the current maximum of twelve months backdating is being reduced to four weeks.
There will be one major exception to all these rules. If someone claims late because a Government official has misled them or wrongly discouraged a claim then backdating will be unlimited, as it is now.
Altogether these changes to backdating will affect more than half a million people a year and save £127 million a year when fully in force.
Help with mobility or care
Another change will affect older people who have difficulty walking or getting about. The benefit to help with these mobility needs is called disability living allowance mobility component and it is worth up to £34.60 a week. It can only be claimed by people who have mobility problems before their 65th birthday. But at the moment they get a year's grace in which to claim. In other words their claim has to be made before their 66th birthday. From October 1997 that year's grace will be withdrawn and they will have to have the mobility problem AND make the claim before their 65th birthday. Once awarded mobility component lasts for life, so missing the deadline could cost a lot of money.
A similar change in rules will apply to people who claim disability living allowance care component. Older people who kiss the deadline and need care all day or all night will be able to claim attendance allowance - an equivalent benefit for those over 65. But if they need less care, at least 40 minutes a day, if they claim before they are 65 they can be the lowest rate of disability living allowance which is £13.15 a week. There is no equivalent for someone who has already reached 65. So anyone who needs that amount of care and is nearing 66 should claim before the rules change in October.
The Government estimates that these changes will affect 10,000 people a year and save £45 million in the year 1999/2000.
War Pensions
The most significant change to war pensions ever made was announced on 5 December 1996. In future anyone claiming a war pension on the grounds that their hearing was damaged by noise will have to produce evidence of the condition of their hearing at the start and end of their military service. Any change in hearing after they left the forces will be ignored. That will make successful claims almost impossible especially those going back to the last war or to National Service. Pensions currently in payment will not be affected but the pension will not be increased when hearing gets worse. The change will affect 15,000 people a year and save £10 million annually.
There were nearly 20 other changes to war pensions announced just after the Budget. Some were improvements but many will make claims more difficult.
These changes, which are expected to come into effect in April 1997, will affect around 7000 people a year and save £5 million.
February 1997
e-mail Paul Lewis on paul@deadline.demon.co.uk