I have recently assisted a client claim guarantee Pension Credit despite a substantial lump sum in with profits bonds following a personal injury payment.

However the cl reported he had been iro Income Support previously. He contacted his local office in 1998 to report he had received this personal injury payment. Cl informs that his IS was stopped immediately without notification as he exceeded the capital limit.

Sch 10 para 12A IS Regulations 1987 (or p913 CPAG) states that such a payment should be disregarded for 52weeks to allow the client to put it into a trust or spend it.

Client was denied this opportunity so I have requested a revision (June) due to official error.

Questions:

What are my options if the local office refuses to revise?

As the purpose of the 52 wk disregard is to allow the cl to set up a trust can I argue that as this was denied cl should receive IS until he was eligible for Pension Credit?

Finally as the trust does not have to be a formal deed is there any scope to argue that the money was not directly accessible in the with-profits-bond?

The problem is that paragraph 12A was only inserted into the regulations (in England at least) with effect from 2/10/06. Up until then it could only be ignored if it was in a trust. Therefore the money will be taken into account as capital from the date it was first paid until such time as it was put into a trust.

I believe with profits bonds are generally written as life insurance policies, and the surrender value of these is ignored. The policy document has to say that a sum of money will be paid out on death, and how it is calculated, but it doesn't matter how much it is. In the case of with profits bonds, the original sum invested is typically returned on death. Depending on your clients reasons for investing in bonds and the timing, there could be a deprivation of capital issue however.