State Pension payment arrangements

The Government’s preference is to pay into a bank, building society or credit union account on the basis that, this is “the most efficient, cost effective and preferred way to make pension and benefit payments” (PQ 108720 24 October 2017). In October 2017, the Government said that payment into a Post Office card account (POca) remained an option until at least 2021, although it had the option to extend this to 2024 (PQ 108721).

In February 2021, DWP said it was writing to customers who currently receive their State Pension or benefit payments into a POca telling them that the service was closing and asking them to provide alternative account details.

The POca website state that “almost all bank accounts are already accessible in your local Post Office, allowing you to withdraw cash and check your balance from your regular Post Office branch, as well as deposit cash and cheques.”

For customers who are unable to open or manage a mainstream account, or choose not to open an account, the Department intends to offer an alternative Payment Exception Service to allow continued access to cash payments across all locations (including suburban and rural locations. (PQHL 10760, 10 December 2020). It is in the process of procuring this service (PQ 154994 1 March 2021).

The POca website has information about accessing State Pension payments during the COVID-19 outbreak. It explains the process for nominating a trusted individual to become a Permanent Agent, including by phone.

The State Pension is a weekly benefit, generally only paid in multiples of a week. It is usually paid four-weekly in arrears. From 2010, individuals are allocated a payday according to the final two digits in their National Insurance number. (SI 1987/1968, reg 22C; Gov.UK/The new State Pension: what you’ll get)

Before the introduction of the new State Pension on 6 April 2016, payment started from the first payday after the individual reached State Pension age, meaning there was often a gap at the beginning of the claim. The same principle applied at the other end of an award, so that when the pensioner died, their state pension was payable to the end of that benefit week.

With the introduction of the new State Pension, the rules were changed to allow part-week payments at the start and end of a State Pension claim. Although people may have to wait a few days for their first payday (as before), they will receive an amount in arrears to cover the gap (Explanatory Memorandum to SI 2015/1985, para 7.14)