DIRECT
PAYMENTS: HOW BENEFITS WILL BE PAID
What options you have and
how to find more information
The government is changing
the way we get our benefits – everything from pensions and
incapacity to child benefit and income support.
It’s a cost cutting move that will mean all state payments
are made directly into a bank or post office account.
Claimants will be given a choice
of how they want benefit cash paid. Existing bank account holders
can have their money paid in directly. Someone who wants a post
office card account will have to take their letter to the local
branch to open the account.
It will also have important
implications for the Post Office network, as these transactions
generate over £400m of income - over one third of its total.
Postwatch
is keen to ensure that this change is implemented in customers’
best interests.
• Postwatch remains unconvinced
that customers will, in reality, be able to choose freely between
the accounts available to them and is concerned they may be managed
into commercial accounts, which don’t cost the Government
to run.
• Postwatch is concerned
that claimants may be put off opening a Post Office Card Account
if that is their preferred choice because of the process they have
to go through to get one. After being told that they must now have
their money paid into an account, claimants who choose the Post
Office Card Account must phone a call centre where they are taken
through all the other banking options also available to them. If
they still want a Card Account, they are then sent a Personal Invitation
Document, which must be filled in and taken to the post office with
proof of identity.
• The Government has
not yet done enough to ensure that customers understand that they
can still use the post office to collect their benefits and pensions
after April 2003. Given the Government’s stated support of
the social value of the Post Office network, Postwatch believes
that active promotion of access to benefit cash at post offices
would send a strong signal both to the public and to sub-postmasters.
• Postwatch believes
that there is not enough information currently available to consumers
even though the change is due to begin in just a few months. Customers
must be free to make an informed choice about which account suits
them best and this means they must have adequate access to information.
Generic information leaflets will not be available in post offices
until January but customers are asking questions now.
• The Government should encourage all banks to allow cash
withdrawals from their ordinary current accounts at the Post Office.
At present only 7 banks allow this. The 12 million or so people
with bank accounts who still choose to collect their pensions and
benefits at a post office, need to be informed of this to decide
if their existing account is the most suitable to receive their
payments.
• If recipients are unsure
about which account to choose, they should have access to free,
independent financial advice.
• A number of outstanding
issues still need to be resolved, for example, if a person unexpectedly
or temporarily requires someone else to collect their money, say,
due to illness.
Postwatch says
– "We believe that, given full information about the
options, many people would continue to collect their benefit at
a post office.
Postwatch has joined with a number of other organisations to highlight
our concerns. Together with Age Concern, Help the Aged, Virsa, National
Association of Citizens Advice Bureaux, Women's Institute, Disability
Rights Commission and ACRE, we wrote to Andrew Smith, Secretary
of State for Work and Pensions outlining our main concerns and requesting
a meeting."
What types of accounts
can benefits and pensions be paid into?
A new Card Account
at the Post Office. This account can receive only benefits
and state pension payments (other deposits will not be accepted)
and withdrawals can only be in cash at a post office counter. Account
holders will get a plastic card, instead of order books or girocheques,
and will have to remember a personal identification number (PIN)
to use it;
A basic or no frills
bank account. These can be opened at most High Street banks
and at the Nationwide Building Society. Cash can be withdrawn free
of charge from Post Offices. There may be a charge for cash withdrawn
from branches of the bank and from cash machines. The account will
accept any deposits. Direct debits and standing orders can be set
up but loans or overdrafts will not be available. There could be
charges of up to £37.50 for unpaid direct debits.
An ordinary bank or
building society accounts, which can receive a payment
by direct credit. These can provide a wide variety of services.
Only seven banks allow free deposits and cheque withdrawals from
their current accounts at Post Offices - Alliance and Leicester,
Barclays, cahoot, Lloyds TSB, the Co-operative Bank, smile, or First
Direct (in Scotland).
Direct Payment Helpline: 0800 107 5000
Text phone number : 0800 107 4000
Child Benefit helpline: 0800 092 7036
Help the Aged Seniorline:
0808 808 75 75
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