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Experienced Independent Financial Advisers

State Pension and Carers Allowance

13 Jul 2017

The House of Commons has published a briefing paper looking at the interaction of Carers Allowance and the state pension.

Carer’s Allowance is an “income replacement” benefit for people who are unable to work because they are caring full-time for a disabled person. Since 2002, Carer’s Allowance has been payable to people aged 65 or over, but it cannot be paid in addition to the Retirement Pension. This is because of the “overlapping benefits” rule. Although an entitlement to both benefits can mean that Carer’s Allowance is not payable, for lower income pensioners an “underlying entitlement” to Carer’s Allowance can give access to carer additions to means tested benefits such as Pension Credit. For other pensioners however, a claim for Carer’s Allowance may result in them receiving no additional financial support.

Cash benefits for carers consist of:

  • Carer’s Allowance, currently worth £62.70 a week (2017-18 rates)
  • The carer premium/addition payable with means-tested benefits such as Income Support, Pension Credit, and Housing Benefit. It is payable to those who satisfy the conditions for Carer’s Allowance, and is currently £34.95 a week.

People who make a claim for Carer’s Allowance are often unhappy to find that it is withdrawn if they are also entitled to a state pension. This is due to the “overlapping benefits rule”. In 2017-18, around 367,000 people over State Pension in Great Britain are expected to satisfy the care conditions for Carer’s Allowance, but only around 18,000 will actually receive the benefit.

The overlapping benefits rule does not only apply to people eligible for both Carer’s Allowance and the Retirement Pension. Carer’s Allowance cannot be paid in full if an individual could also get any of the following benefits:

  • Retirement Pension
  • Incapacity Benefit
  • Contributory Employment and Support Allowance
  • Severe Disablement Allowance
  • Contribution-based Jobseeker’s Allowance
  • Widow’s Pension/Bereavement Allowance
  • Widowed Mother’s/Parent’s Allowance
  • Maternity Allowance
  • Unemployability Supplement paid with Industrial Injuries Disablement Benefit or War Pension
  • Training allowances.

If the amount of the above benefits is less than the amount of Carer’s Allowance, then the difference is made up.

The rationale for these provisions is that Carer’s Allowance is paid to provide income for a person unable to work because of their caring responsibilities. It cannot therefore be paid in addition to any of the other income maintenance benefits listed above. To do so would be against the long-standing feature of the social security system that “double provision should not be made for the same contingency”.

Although there has not been a change to the overlapping benefits principle, it worth remembering what benefits are impacted on receipt of the state pension.

Footnote: Our belief is that all finacial advice should be tailored to your particular needs and situation. The content of the articles featured in here are for your general information and use only; they are not intended to address your particular requirements or constitute a full and authoritative statement of the law. They should not be relied upon in their entirety and shall not be deemed to be, or constitute advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. Please get in touch to meet with us for a full consultation.

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