Ex DWP worker issues 'virtually impossible' State Pension update
Pensions Minister Torsten Bell has recently confirmed that the State Pension will not be means-tested in the future. This comes after speculation that the benefit could be next on the Labour Government's review list. The New and Basic State Pensions are subject to an annual increase under the Triple Lock system.
This increase aligns with the highest of three figures: average annual earnings growth from May to July, Consumer Price Index (CPI) inflation for the year ending in September, or 2.5 per cent. The Deferred State Pensions and additional elements rise in accordance with the CPI inflation rate as of September.
Around 55 per cent of social security spending is allocated to pensioners. In the fiscal year 2025/26, the Department for Work and Pensions (DWP) is projected to spend £174.9 billion on benefits for pensioners. This includes the State Pension, which is forecasted to cost £145.6bn in the current financial year, reports the Daily Record.
As these costs continue to rise, the topic of means-testing is likely to resurface. However, former DWP employee Sandra Wrench, who has 42 years' experience dealing with benefits including the State Pension, argues that it would be "virtually impossible" to means-test the State Pension due to the differing administrative structures for the New and Basic State Pensions.
Speaking to the Daily Record, Mrs Wrench explained: "There are two main barriers that the Uk Government would face if they did go down this path and why it makes it virtually impossible to means-test the State Pension. I worked on the State Pension section at Bedford DWP for 18 years, and when you actually process claims for the State Pension, you have a greater understanding and knowledge of the benefit."
Voluntary Contributions paid by way of cash
You can plug holes in your National Insurance (NI) record by making cash payments into the State Pension scheme through Voluntary Contributions.
Mrs Wrench said: "You are not going to pay cash into a scheme unless you can get your money back. We look at the recent time extension for the payment of Voluntary Contributions from 2006, where the deadline was originally April 5, 2023, but this was extended by the UK Government to April 5, 2025, so they are still actively encouraging the payment of Voluntary Contributions. Would they be doing this if they were going to means-test the State Pension? The answer is no."
She continued: "If the State Pension was means-tested, HM Revenue and Customs (HMRC) would have to refund Voluntary Contributions to those members of the public, who had paid them, but were not entitled to the payment of State Pension.
"State Pension is based on the NI contributions you pay from age 16 to State Pension age - typically, a period of 50 years - so some people may have paid Voluntary Contributions 20/30 years ago for a period in the future. It is unlikely that HMRC would retain detailed payment details of Voluntary Contributions, both Class 3 and Class 2, paid all those years ago, even though the NI record will confirm that Voluntary contributions have been paid, which count towards qualifying years."
The DWP insider emphasised how if the State Pension became means-tested, would HMRC be capable of refunding NI contributions from decades past?
Mrs Wrench said: "In a nutshell, the answer is probably no, unless the customer had kept detailed records of all payments made for past years."
She added: "I myself paid a substantial sum into the Additional Pension Top Up scheme for those who were State Pension age before April 2016, and this scheme ran between Oct 2015 and April 2017. Due to the higher rate of Basic State Pension for the New State Pension, currently £230.25 a week, this gave those pensioners who were State Pension age before April 2016 with the lower amount of Basic State Pension, currently £176.45 a week, the opportunity of purchasing up to £25 a week additional pension to help bridge this gap."
It's crucial to note that the Additional Pension increases annually under the CPI measure of the Triple Lock.
Additional Pension (1978-2016) and contracted out employment
The Old Basic State Pension scheme comprises three elements:
Basic State Pension - paid on the number of qualifying years which you have
Additional pension - first known as SERPS (State Earnings Related Pension Scheme) from 1978, then known as the Second State Pension from 2002 to 2016, and it was the additional State Pension scheme you could contract out
The Graduated Retirement Pension which existed from 1961-1975
Mrs Wrench clarified that with 'contracted out' employment, your additional pension is disbursed with your occupational pension rather than being paid by the state. She continued: "DWP have admitted and confirmed in writing that they do not know the exact amount your scheme will pay you as a result of contracting out as it will depend on the actual rules of your private scheme.
"So DWP would have to estimate the amount of additional pension in pay for State Pension purposes, if that person had been in contracted out employment. So how can you means-test an amount which is estimated?.
"DWP have stated that the pension you get from your workplace or personal pension scheme for the periods you were contracted out, should include an amount that, in most cases, will be the equivalent of the Additional State Pension you would have got if you had not been contracted out, and this amount is known as the Contracted-Out-Pension-Equivalent (COPE).
"DWP will know how much Additional Pension you would have got if you had not been contracted out, but this figure will be distorted once it is incorporated into an occupational pension scheme, via contracted out employment."
Contributory and Non Contributory Benefits
Mrs Wrench explained how non contributory benefits are funded by general taxation and do not depend on NI contributions, and are benefits such as Attendance allowance, Carer's Allowance, Child Benefit, Universal Credit and Personal Independence Payment.
Contributory benefits are funded by NI contributions and include benefits such as Jobseekers Allowance, Employment and Support Allowance, State Pension and Statutory Sick Pay.
Mrs Wrench said: 'You could understand non contributory benefits being means tested, such as Universal Credit, but you would be hard pushed to start means testing contributory benefits, such as State Pension, as the payment of these depend on NI contributions paid by the public, and the public have paid into the scheme.
'With means testing, you are paid the benefit on a temporary basis, and if your circumstances change, the amount of money you are paid could fluctuate. The last thing you want when you reach retirement is fluctuating income, and the anxiety which accompanies this .
'At least with the State Pension, you receive what you are entitled to, know exactly how much money you have coming in a month and know exactly where you stand financially'
She added: 'To mention means-testing the State Pension may cause concern for some people, particularly when their State Pension may be their main source of income, but for the reasons mentioned above, it is highly unlikely that the government would be actually able to means-test it.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Telegraph
28 minutes ago
- Telegraph
HMRC sacks dozens of staff for snooping on taxpayers
Have you worked or do you work at HMRC? Tell us about a data breach in confidence at: money@ Information that needs a higher level of security can be submitted here. Please see our Privacy Notice. HM Revenue and Customs sacked 50 workers last year for breaking data privacy rules and snooping on taxpayers' records. In total, 354 tax employees have been disciplined for data security breaches since 2022, of whom 186 have been fired, The Telegraph can reveal. The tax office admitted that some were dismissed for looking up taxpayers' confidential information. HMRC holds a vast amount of sensitive data such as addresses, salaries and National Insurance numbers. Staff are forbidden from looking up these details unless they have a genuine business reason. Despite the warnings, a number of employees have been caught accessing unauthorised accounts using HMRC's IT systems. In 2024-25, 96 staff were disciplined for data security breaches, of whom 50 were later dismissed, according to data obtained by The Telegraph via a Freedom of Information request. HMRC said this represented less than 0.1pc of its nearly 68,000 staff. The numbers have fallen since last year when 138 employees were disciplined, and 68 were given the sack. The figures covered all data security breaches and not just staff searching for taxpayers' records. Other examples of data breaches include making changes to records without authorisation, losing sensitive documents or failing to securely dispose of inadequately protected devices. In one incident in 2023, an employee was sacked from HMRC after sending the data of 100 individuals to his personal email address. According to court documents, the staff member was visiting a business as part of a compliance check when he emailed himself a PDF containing a list of staff members' details – including their salaries and National Insurance numbers – and printed it off for the meeting using his home computer. The incident was flagged to his line manager by the analytics team responsible for identifying data breaches and he was dismissed for gross misconduct following an investigation. The worker took HMRC to an employment tribunal, arguing he had not been thinking straight at the time due to anxiety. However, the tribunal dismissed his claim for wrongful dismissal. Data breaches like this have been on the rise since the pandemic because of remote working, according to one HMRC manager cited in the tribunal. In an email reminding staff never to send personal data outside the tax office's systems, the line manager of the claimant wrote: 'There have been more incidents of this recently as we are working from home a lot more since Covid, but never send anything to your own private email address to print off that contains any personal or business data.' Former HMRC inspectors said the importance of data security was drilled into employees from day one. Ronnie Pannu, of advice firm Pannu Tanu, said: 'When I was in HMRC, there was always a strong message from above that viewing a taxpayer's records where this was not necessary for a particular purpose was a serious issue which could have serious consequences for the individual concerned.' John Hood, of accountants firm Moore Kingston Smith, said: 'Any HMRC employee foolish enough to look up personal information that is not part of their usual responsibilities faces a ticking time bomb as most searches are tracked. 'As an additional security, some parts of the system are restricted so that only specifically authorised personnel can access them, such as the departments dealing with MPs and civil servants.' All staff receive mandatory training on data security, and HMRC restricts access so workers can only look up customer records if this is needed for their specific role. In addition, the tax office tracks staff activity on its systems to deter misuse and record breaches. Employees who break the rules are investigated and will face penalties, with each incident considered on a case-by-case basis. Ellen Milner, of the trade body the Chartered Institute of Taxation, said: 'Taxpayers have to be able to trust that the private information they provide to HMRC will not be leaked, supplied to criminals or used for any purpose other than that for which it was provided, and in accordance with the law. 'That is why HMRC treats unauthorised access to records and data so seriously, and it is good to see that where breaches happen, HMRC will act.' On the social network, Reddit, users who claim to work at the Civil Service say they have seen new recruits at HMRC and the Department of Work and Pensions (DWP) fired after looking up their own records or those of friends and celebrities out of curiosity. In 2021, an administrative officer was sacked from DWP after looking up her neighbour's address using Searchlight, a database containing information about almost everyone in the country. According to the court documents, DWP workers are explicitly told not to look up themselves, families or celebrities. A DWP employee present at the tribunal described it as 'the number one rule' impressed upon everyone who joined the department. Serious data breaches must be reported to the Information Commissioner's Office. HMRC's annual report shows that there were six incidents last year of employees changing customer records without permission, and two of staff losing inadequately protected devices. HMRC is under growing pressure to strengthen its data security as criminal attacks grow more sophisticated and as it shifts towards becoming a digital-first organisation. It recently emerged that 100,000 taxpayers had been affected by phishing attacks in the past year. Criminals used stolen credentials to access taxpayers' accounts and claim significant sums in rebates. There was no loss to the individuals, who have since been contacted, and a number of arrests were made – but the cost to the taxpayer was £47m. A spokesman for HMRC said: 'Instances of improper access are extremely rare, and we take firm action when it does happen, helping prevent a recurrence. 'We take the security of customers' data extremely seriously and we have robust systems to ensure staff only access records when there is a legitimate business need.'
Western Telegraph
2 hours ago
- Western Telegraph
DWP State Pension Pension Credit payment changes August 2025
August 25 2025 is a bank holiday where payments from the Department for Work and Pensions (DWP) won't be made. If you are due to receive a DWP benefit payment on either day, you may find you receive it early. When a payment date falls on a weekend or a bank holiday, then the Department for Work and Pensions says the claimant is generally paid on the working day before. Most payments due on Monday August 25 2025 will instead be made early, with most arriving on Friday August 22. If your payment is due on a different day, it will arrive in your account as normal and the amount you are due to be paid will remain the same. These are the benefits that may be affected by the bank holiday weekend: Attendance Allowance Carer's Allowance Child Benefit Disability Living Allowance Employment and Support Allowance Income Support Jobseeker's Allowance Pension Credit Personal Independence Payment (PIP) State pension Tax Credits Universal Credit While you may be paid earlier in some cases, the money will also have to last you longer, as payment dates will return to normal afterwards. Which day is my State Pension paid? The basic State Pension is usually paid every 4 weeks into an account of your choice. If you want to change the account, tell the Pension Service. The day your pension is paid depends on your National Insurance number. 00 to 19 - Monday 20 to 39 - Tuesday 40 to 59 - Wednesday 60 to 79 - Thursday 80 to 99 - Friday How much basic State Pension you get depends on your National Insurance record. The full basic State Pension is now £176.45 per week. You may have to pay tax on your State Pension. Recommended reading: The DWP confirmed the early payment policy on its official website, stating: 'If your payment date is on a weekend or a bank holiday, you'll usually be paid on the working day before.' While the amount being paid out will stay the same, experts are warning that the earlier date could throw off people's budgeting, especially as the cost-of-living crisis continues to bite. The two remaining bank holidays for 2025 fall on Christmas Day and Boxing Day.
Western Telegraph
2 hours ago
- Western Telegraph
HMRC Child Benefit warning as families face losing £1,300
Last year, 870,000 parents extended their Child Benefit payments, with most applying on the HMRC app or the digital service, but this year it's estimated more than 214,000 eligible families are missing out on this vital support, with many unaware of the hidden perk that comes with it. Child Benefit automatically stops on 31 August after a child turns 16 unless parents confirm their teenager is staying in full-time education or approved training. The payment is worth £26.05 a week for the eldest or only child (£1,354.60 a year) and £17.25 a week for each additional child (£897 a year). Fiona Peake, Personal Finance Expert at Ocean Finance, explains: "Missing the renewal deadline means you're turning down free money your family is entitled to. For lower-income families already juggling bills, losing over £100 a month can mean cutting back on essentials or relying on credit to get by. 'The bigger, hidden cost is the loss of National Insurance credits that count towards your state pension. Missing just one year could mean losing around £342 a year in retirement income, and missing the full eligibility period could cost more than £4,000 a year. If you take time out of work to raise children and don't claim, you could be short-changing yourself by thousands in later life.' HMRC sent letters between May and July to remind parents to renew, but if they miss the deadline, payments will stop from September. 5 ways for parents to make the most of HMRC child benefits Renew early: "As soon as you know your child's plans after GCSEs, renew your claim. Use the HMRC app, go online at or scan the QR code on your letter," says Fiona. "Do not wait until the last week of August, you could lose out on September's payment.' Check your claim: "Even if you earn over £50,000 and repay the High Income Child Benefit Charge, still make the claim. You'll keep the National Insurance credits that count towards your pension, which could be worth thousands later on." Track deadlines: 'Put HMRC renewal dates in your phone calendar. This small step can protect over £1,300 a year for your first child plus pension credits.' Adjust if you missed it: "If payments have stopped, review your spending now so you don't turn to costly borrowing to cover essentials.' Get help for money worries: 'If losing Child Benefit has left you struggling, check if you're eligible for other benefits like Universal Credit or programs run through your local council. If you have other debts that run up your monthly expenses, debt consolidation could be an option.' Is your 16-19 year old planning to stay in education or training in September? Extend your Child Benefit claim now. Find out how 👇 — HMRC Press Office (@HMRCpressoffice) May 13, 2025 How much is Child Benefit? Child Benefit is currently worth £26.05 per week - or £1,354.60 a year - for the eldest or only child and £17.25 per week - or £897 a year - for each additional child. More than 870,000 parents extended their Child Benefit claim for their teen last year with the majority confirming online or via the HMRC app in minutes. Myrtle Lloyd, HMRC's Director General for Customer Services, says: "Child Benefit is an important boost to families. As soon as you know what your teenager is planning to do, extend your claim in minutes to guarantee your payments continue in September. Simply go to or the HMRC app to confirm today." Child Benefit can continue to be paid for young people who are studying full time in non-advanced education as well as unpaid approved training courses. Visit the HMRC Child Benefit website to check full eligibility. Rebecca Fagan, benefit and welfare information officer at Advice Direct Scotland, says: 'Child Benefit is really important for many households, particularly at a time when budgets are being stretched by the cost of living and energy. 'Our message to parents is not to delay, but to act now. Extending your child benefit claim is easy, and it could put thousands of pounds in your pocket. "Our free, impartial service at is here to help anyone who is confused about child benefit. People can visit or call 0800 756 3381 for support.' What about the High Income Child Benefit Charge? If either the claimant or their partner has an individual income of between £60,000 and £80,000, the higher earner will be subject to the High Income Child Benefit Charge. For families who fall into this category, the online Child Benefit tax calculator provides an estimate of how much benefit they will receive, and what the charge may be. Recommended reading: From this summer, as part of the government's Plan for Change, families will have the option to use a new digital service to pay the charge directly through their PAYE tax code instead of filing a Self Assessment tax return. The new service will cut red tape for eligible employed parents who are liable to the High Income Child Benefit Charge but those who choose to pay the charge through their Self Assessment can continue to do so. Families who have previously opted out of Child Benefit payments can opt back in and restart their payments quickly and easily online or via the HMRC app. There's also an HMRC reminder for the Child Trust Fund - don't miss out Teenagers turning 16 can take control of their HMRC Child Trust Fund savings account, which could be worth thousands of pounds, and can withdraw the money once they turn 18. Child Trust Funds were set up for every child born between 1 September 2002 and 2 January 2011. If teenagers or their parents and guardians know who their Child Trust Fund provider is, they can contact them directly. If they don't know where their account is, they can use the free online tool on to find out who their Child Trust Fund provider is.
