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My mother has been underpaid for state pensions for years and is now being punished by Congress

My mother is a victim of a £ 3 billion state pension scandal. She seems to have been sacrificed again by the local government.

Because of this scandal, my mother recently received a large payment from the Department for Work and Pensions for their incompetence, which dates back 12 years to the time my father died.

Currently, due to this payment, the local government has suspended tax incentives for my mother’s housing and parliament. This is because this payment regarded my mother as capital above the £ 16,000 savings limit.

State Pension: My mother had a low wage for 12 years due to DWP’s negligence, but now she is being punished by Congress for a large repayment.

Therefore, not only has she been underpaid by DWP for the past 12 years, but this underpayment, which is currently being amended, will be reclaimed from her in time by the local government.

Is this what the local government can do? Also, several other women boarded the same ship as my mother, they were entitled and sacrificed twice for money that had not been paid over the years, and they received it. Will their interests just stop after that?

Scroll down to find out how to ask Steve your Pension question

Steve Webb answers: next This is money and I am doing a campaign activity with a low wage state pension, It is estimated that approximately 200,000 people will receive a total repayment of approximately £ 2.7 billion over the next few years.

This means that the average lump sum payment will be around £ 13,500, but some will receive less and some will receive much more. In some cases, it can exceed £ 100,000.

Readers, like you, send a number of questions asking how receiving these amounts affects their tax obligations and the eligibility of benefits and aids tested by other forms of means. I did.

Steve Webb: In the box below, see how to ask a former pension minister about retirement savings.

Steve Webb: In the box below, see how to ask a former pension minister about retirement savings.

Therefore, I will answer your question and a range of related questions below.

Tax: Not fully taxed in one year

There is a relatively clear answer from the government regarding income tax. State-owned pensions are taxable and delinquent lump sum payments are taxable, but the full amount of this lump sum is not taxed for one year.

Instead, you will be taxed as if you received your pension payment on time each year. In addition, payments related to one year more than four fiscal years ago can be ignored.

Many women with modest state pensions and other limited incomes would not have been taxpayers, even if they were paid at the right wages at the time.

This means they don’t have to pay taxes from the lump sum. However, a taxpayer who was a taxpayer (or if he was paid at the correct tax rate) without the tax increase may have to pay some income tax from the lump sum.

It may be worth asking an accountant for one-time help to make sure you get the right answer.

It’s still taxing, but another reader asked about the inheritance tax position of the person receiving the lump sum.

Our understanding is that the lump sum you are receiving now will only be part of your property along with other assets.

Unfortunately, if you die shortly after receiving the lump sum and own a relatively large property, you may be subject to inheritance tax on the lump sum you just received.

Benefits: Increasing savings may result in less support

Why are some women underpaid for state pensions?

Married women who retired on a small state pension before April 2016 should also be raised to 60% of their husband’s payments when their husband reaches retirement age.

Since 2008, the increase is supposed to be automatic, but before that, women had to apply to receive the full amount.

Some widows have also been affected by the negligence of the government accusing junior civil servants of not properly manually breaking records for decades.

Find out how to see if you have low wages and what to do about it here.

Looking at the benefits, the rules are a little different.

The payment you just received is probably related to the weekly pension payments you should receive over the years, but now it’s just a lump sum in your bank account.

Unless DWP decides that such payments should be ignored when calculating your profits, additional savings may reduce your profits. The way this works depends on the benefits.

The main relevance is:

-Pension Credit: The first £ 10,000 savings will be ignored, but for every £ 500 above this level, you will be treated as generating £ 1 a week. There is no maximum savings limit.

-Housing Allowance and Council Tax Support: Savings rules are stricter for these allowances than for pension credits. If you have savings in excess of £ 6,000, this will be taken into account when the benefits are calculated. If you exceed £ 16,000, you may be completely disqualified. One exception to this is Guarantee the credit component of annuity credits.

The focus of this article is primarily on the impact of lump sum payments, but if your weekly pension is increased on a regular basis, this can also lead to a decrease in regular assistance from pension credits and other benefits. It’s worth remembering that.

Care Fees: Lump-sum payments affect the help you get when things are standing

The means test also applies to other areas, especially social care payments.

Steve Webb answers your pension questions

The rules vary by region in the UK, but the amount of assistance you can get from long-term care is generally influenced by how much you save.

For example, in England and Northern Ireland, if you have savings above £ 14,250, you may have less support, and if you have savings above £ 23,250, you may not get support.

Details, including rules for other parts of the UK, are as follows: here.

I’ve already heard from a reader on behalf of older relatives who are likely to receive less support for long-term care because they receive a lump sum payment for a state-owned pension.

Will you lose twice?What will happen now

Many will find it unfair to lose twice. First, they were state-owned pensions, sometimes with low wages for years.

Second, they can now lose their means-tested benefits because their pensions are paid as a lump sum rather than weekly.

Ideally, DWP would agree to ignore these lump sums when calculating profits, but so far there are no signs that they are planning to do so.

What are you doing tDoes he say DWP?

“The action we are taking now is to correct the historical underpayments made by successive governments and to ensure that anyone affected receives everything they owe. Will be contacted by us, “said a DWP spokesman.

Earlier, he said: We corrected the record and refunded the affected people as soon as the error was identified.

Married women who are already receiving a state-owned pension added that if their husband reaches the age of the state-owned pension before March 17, 2008, they will need to separately request an increase in the state-owned pension.

No claim is required if the husband reaches the age of the state pension after March 17, 2008.

The DWP encourages anyone who thinks they couldn’t claim a state pension increase to be eligible to contact the department.

Read the full DWP on unpaid state pensions here.

Ask Steve Webb a pension question

Former pension minister Steve Webb, this is his uncle in agony of money.

He is ready to answer your question, whether you are still saving money, in the process of quitting your job, or juggling your retirement finances.

Steve left the Department for Work and Pensions after the May 2015 elections. He is currently a partner of actuary and consulting firm Lane Clark & ​​Peacock.

If you would like to ask Steve about pensions, please email him. pensionquestions@thisismoney.co.uk..

Steve will do his best to reply to your message in the next column, but he will not be able to answer everyone or contact the reader personally. Nothing in his answer constitutes regulated financial advice. Published questions may be edited for brevity or other reasons.

Include your daytime contact number in your message. It is treated as confidential information and will not be used for marketing purposes.

If Steve can’t answer your question, you can also contact the Pension Advisory Service, a government-sponsored organization that provides free assistance to the public. TPAS can be found Here Its number is 08000113797.

Stevee receives many questions about state-owned pension forecasts and COPE (Contracted Out Pension Equivalent).If you’re writing to Steve on this topic, he answers the typical reader’s question. Here.. It contains links to Steve’s previous columns on state pension forecasts and contracts. This can be useful.

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My mother has been underpaid for state pensions for years and is now being punished by Congress

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