Introduction on Post office card account

The interaction between benefit-entitlement rules and various financial accounts can sometimes be complex and confusing. One recurring question is whether certain types of payment accounts or cards are treated as “savings” (capital) or simply as payment conduits for the purposes of means-tested benefits like Pension Credit.

In particular, attention has been drawn to the Post Office Card Account (POCA) — a basic payment vehicle used by many benefit recipients — and whether the funds held (or held temporarily) in a POCA count as savings (capital) for the purpose of calculating Pension Credit under the Department for Work and Pensions (DWP) rules.

In this article we will:

• Explain what a POCA is, how it works, and its place in the benefit system
• Summarise the rules around savings/capital for Pension Credit
• Examine the specific issue of POCAs and whether the DWP treats them as savings
• Review relevant guidance, case law, and commentary
• Draw practical conclusions and give guidance for claimants
• Highlight areas of uncertainty and suggest further action

1. What Is a Post Office Card Account (POCA)?

The Post Office Card Account (POCA) was introduced by the UK government in April 2003.

Key Features

• A simple payment vehicle provided by Post Office Ltd for persons who could not, or did not wish to, use a conventional bank or building society account.
• Allowed benefit and pension payments from the DWP and other agencies to be paid electronically into the account. The claimant (or their nominated helper) could withdraw cash at any Post Office branch.
• Had very limited functionality: no direct debits, no bill payments, no cheque book, and no interest paid.
• Designed for people who might be financially excluded or lacked conventional banking facilities.
• The government later decided not to renew its contract beyond the period, signalling the scheme’s eventual closure.
• As of September 2021, DWP announced that no payments into POCAs would be made after May 2022 and all accounts were to be closed.

In short: the POCA was a payment mechanism, not a savings account in the conventional sense.
It could only receive benefit payments — not wages or deposits — reinforcing its limited scope.

2. Savings and Capital Rules for Pension Credit

To understand whether a POCA might count as savings for Pension Credit purposes, we first need to understand how savings and capital are treated.

2.1 What Is Pension Credit?

Pension Credit is a means-tested benefit for people at or above State Pension age who have a low income. It has two parts:

• Guarantee Credit – tops up weekly income to a minimum amount
• Savings Credit – for people who reached State Pension age before 6 April 2016 and have some savings or pension income

2.2 Capital Thresholds

The DWP uses capital (savings and investments) to calculate eligibility and payment levels:

• If total savings/investments are £10,000 or less, they’re ignored for Pension Credit.
• If savings exceed £10,000, every £500 (or part thereof) above that threshold is treated as providing £1 per week of notional income.
• “Savings and investments” include:
  • Money in any bank, building society, or Post Office account
  • Cash, ISAs, National Savings products, shares, and other investments
• Some assets — such as your home — are disregarded.

The DWP requires claimants to report changes in capital, and can apply notional capital rules if it believes assets were deliberately spent or transferred to increase benefit entitlement.

3. Do POCAs Count as Savings or Capital?

3.1 What the Official Guidance Says

The DWP’s detailed guide for advisers defines “savings and investments” broadly:

“By ‘savings and investments’ we mean:
– Money in a current account, even if used to pay bills
– A savings or deposit account
– Money in any other bank, building society, or Post Office account.”
— DWP PC1 Guidance

At first glance, this means a Post Office account (including a POCA) is included in the definition.

However, the POCA was not a typical Post Office Savings Account — it was a payment account only, with no savings function. This raises the interpretative question:

Should a restricted payment card account be treated like a savings account?

3.2 Interpreting the Rules

Let’s examine the factors:

• DWP has not explicitly excluded POCAs from the capital calculation.
• The POCA has no interest, no deposits from wages, and limited use — which makes it functionally different from normal savings accounts.
• Nevertheless, the DWP guidance says “any Post Office account,” which could technically include a POCA.
• Because POCAs were intended purely for receiving benefits, most had low or temporary balances, making the real-world effect minimal.

3.3 What Evidence Exists

• No specific DWP decision or tribunal case explicitly exempts or includes POCAs in Pension Credit calculations.
• Citizens Advice and Age UK state:

  “Any savings or investments over £10,000 — including money held in bank or Post Office accounts — will affect Pension Credit.”

• Therefore, absent an explicit exemption, POCA balances could count toward capital.

3.4 Practical Conclusion

Unless otherwise stated, it is safest to assume that money in a POCA counts as savings for Pension Credit.
That said, if the account balance is small, it’s unlikely to impact entitlement.

4. Why This Classification Matters

Understanding whether a POCA counts as savings matters for several key reasons.

4.1 Impact on Entitlement

Savings over £10,000 reduce Pension Credit entitlement through deemed income.
If the DWP treats POCA funds as capital, higher balances could reduce weekly benefit amounts.

4.2 Overpayments and Errors

Failing to declare a POCA balance could result in overpayments, which the DWP may recover.
Because many claimants misunderstood the purpose of the POCA, this issue has occasionally led to disputes.

4.3 Protecting Vulnerable Claimants

Many POCA users were financially vulnerable or unbanked.
They might not understand that DWP rules could classify even small account balances as savings.
Advisers and family members should therefore help ensure accurate declarations.

4.4 Transition to the Payment Exception Service

With POCAs phased out and replaced by the Payment Exception Service, the same confusion could arise again — are balances in new payment cards counted as capital?
Understanding how DWP applied rules to POCAs can help anticipate future treatment of replacement products.

5. Real-World Scenarios

Scenario A – Minimal Balance

Mr Smith, age 70, receives Pension Credit and benefits via a POCA.
He withdraws funds immediately after payment, keeping a balance of around £50.

Outcome:
His capital is well below £10,000, so the POCA balance doesn’t affect his entitlement.
Even if DWP counts it as savings, the effect is negligible.

Scenario B – Higher Balance

Mrs Jones, age 68, builds up a £12,500 balance in her POCA by not withdrawing for several months.

Outcome:

• The first £10,000 is ignored.
• The remaining £2,500 counts as deemed capital:
  • For every £500 (or part), £1 per week is treated as income.
  • £2,500 ÷ £500 = 5 → £5/week deemed income.
• Her Pension Credit is therefore reduced by £5 per week.

If DWP excluded POCA balances, no reduction would apply — but the safer assumption is inclusion.

Scenario C – Transitional Account Closure

Mr Ali’s POCA was closed when he was moved to the Payment Exception Service.
During the switch, £400 remained in the POCA temporarily.

Outcome:
That temporary balance still counts as capital until withdrawn or transferred, because it’s “available” to the claimant.

6. Practical Tips for Claimants and Advisers

1. Check balances regularly.
   Even if you withdraw benefits promptly, confirm the closing balance on POCA statements.

2. Declare all accounts.
   When asked about “savings and investments,” list every account — including POCAs — unless the DWP has stated otherwise.

3. Request written clarification.
   If DWP says POCA balances don’t count, ask for that statement in writing.

4. Minimise unnecessary build-up.
   Withdraw benefits soon after payment if you rely on Pension Credit.

5. Avoid deliberate asset transfers.
   Moving or spending money purely to increase benefits can trigger deprivation of capital rules.

6. Keep documentation.
   Retain POCA statements and DWP correspondence for your records.

7. Seek professional advice.
   Organisations such as Citizens Advice or Age UK can clarify how DWP applies the rules to your situation.

8. Appeal decisions if necessary.
   If you believe DWP has misapplied the rules, request a Mandatory Reconsideration and, if required, an appeal.

7. Areas of Uncertainty

Even with available guidance, certain aspects remain unclear:

• No explicit policy statement.
  DWP hasn’t formally published guidance excluding POCAs from capital assessments.
• Functional difference.
  POCAs were payment-only, not savings instruments — yet DWP language is broad enough to include them.
• Availability of funds.
  Some argue capital should only count if “available.” If access was restricted or delayed, this might justify exclusion.
• Replacement systems.
  New payment methods (e.g., Payment Exception Service) could face similar classification issues.
• Notional capital and deprivation.
  Claimants moving money between accounts could be caught by notional capital rules if DWP deems the action intentional.
• Joint accounts.
  If a partner shares access to the POCA, joint-capital rules apply.
• Timing.
  Capital is assessed at specific claim points. Temporary spikes in balances may or may not affect calculations depending on timing.

8. Key Takeaways

9. Recommendations for Claimants

• Always check your total savings, including small POCA balances.
• Run a self-check calculation if your capital exceeds £10,000.
• Ask DWP for confirmation about how they’re treating your POCA.
• Be transparent — undeclared savings can lead to benefit overpayments.
• Keep receipts and statements to verify balances when needed.
• Get expert advice if unsure about any rule.

10. Conclusion

So — were Post Office Card Accounts classed as savings by the DWP in regard to Pension Credit?

The short answer is yes, potentially.
While POCAs were intended only as simple benefit payment tools, the DWP’s definition of “Post Office account” is broad enough to include them.
Because no official exclusion exists, balances held in POCAs could be treated as capital under Pension Credit rules.

That said, for most claimants, POCA balances were small or temporary, making little practical difference.
However, for those with higher balances, this distinction could reduce their Pension Credit entitlement.

As POCAs have now closed and been replaced by newer payment mechanisms, clarity remains essential for ensuring fairness and transparency in how DWP assesses capital.
Until the DWP explicitly states otherwise, claimants should treat POCA funds as savings, report them honestly, and seek advice whenever uncertainty arises.

Further Reading

• DWP: Pension Credit — Detailed Technical Guidance
• Citizens Advice: Check if You Can Get Pension Credit
• Post Office Card Account Closure Announcement — GOV.UK
• Parliamentary Briefing: Post Office Card Account
• Age UK: Pension Credit Explained

Published on OneShekel.com — Independent analysis on finance, welfare, and digital inclusion.