Raising the trivial commutation limit and introducing a pension income disregard were two means-testing solutions put forward at the Pensions Policy Institute seminar last week.
Delegates heard proposals to lift the trivial commutation limit from £15,000 to £30,000, increase the capital disregard for pension credit from £6,000 to £10,000 and raise the upper capital threshold for council tax benefit and housing benefit from £16,000 to £50,000.
PPI research director Chris Curry said people renting in retirement and women who have taken time off work to care for children – two groups identified as being at risk – would be better off under the proposals.
He said: “A woman who has taken time off caring for children would have a pension around £22,000 so could trivially commute under the new option. If she takes the whole thing as a lump sum, less will be taken into account for benefits so she has a clearer incentive to save.”
The pension income disregard option, suggested by B&CE Benefit Schemes, would allow individuals to keep £12 a week of pension income without it affecting their entitlement to means-tested benefits.