New state pension or benefit claimants cannot use Post Office accounts

People who start getting the state pension or receiving benefits from this week onward are barred from using a Post Office card account to collect their cash.

The Government has announced new applicants will have to use a bank account, or a special scheme called the HMG Payment Exception Service if they can’t open one, to get their money.

An estimated 900,000 existing users of Post Office card accounts can still get pensions and benefits paid in until a Government contract runs out in November next year.

Emergency measures are in place to deliver cash to the most vulnerable claimants shielding themselves in the Covid-19 outbreak. 

Allowing people to use Post Office accounts to withdraw state pension and benefits is ‘poor value for taxpayers’, and there has been ‘exceptionally low’ take-up of the option recently, according to the Government.

It has campaigned for years to get people to use bank accounts instead, and was previously accused of sending ‘bullying’ letters to get users to make the switch, without spelling out that this was not compulsory. 

But Post Office accounts have remained popular among many users who are reassured by the lack of overdraft facility or charges, which makes it impossible to get into debt, or who fear bank system crashes will block access to their money.

The Government says that when its contract with the Post Office runs out in November 2021, people still using the card account will either have to get their pension and benefits paid to a standard bank account, or a replacement service will be put in place.

Meanwhile, Work and Pensions Secretary Thérèse Coffey told the House of Commons last week: ‘DWP will stop any new benefit and pension claimants from using the Post Office Card Account from 11 May, as we prepare for the end of this contract.

‘Uptake of accounts in the last year has been exceptionally low but in any event, given that the vast majority of people using POCA we believe already have a bank account, the cost of the contract is poor value for taxpayers.

‘Current customers who currently receive payment through a Post Office card account will see no change and will continue to receive payment into their accounts for the remainder of the contract period.

‘We can use the HMG Payment Exception Service for people who cannot access any bank account.’ 

This service provides payment of cash via PayPoint outlets.

A Post Office spokesperson said: ‘Post Office is proud to provide Post Office Card Account on behalf of the Department for Work and Pensions and their customers.

‘There is no disruption for existing customers and the service will continue to run the end of the contract with the Department for Work and Pensions. 

‘DWP has begun contacting existing customers about how they can change the way they receive any government payments in the future.’

What is being done for people vulnerable to Covid-19? 

The DWP and the Post Office have outlined alternative ways an estimated 27,000 people with cards accounts who are among the most vulnerable to catching Covid-19 can access money right now.

The DWP offers the following options:

– An individual can be authorised by the Government as an ‘appointee’ to act on behalf of someone incapable of managing their own affairs when making a claim or when in receipt of benefit or pension

– They can also become a ‘permanent agent’ permitted by a claimant to collect payment from the Post Office on their behalf

– A claimant can change their method of payment, including to a standard or basic bank account

– They can use the Payment Exception Service, which provides payment of cash via PayPoint outlets.

– If someone requires urgent assistance they can be contacted by a DWP Visiting Officer, who can – in exceptional circumstances – arrange for payment to be made via Royal Mail Special Delivery.

The DWP and Post Office are working in partnership on cash deliveries to help account holders shielding at home due to the risk of infection from coronavirus.

The Post Office says: ‘When notified by DWP of those individuals who require a cash delivery, the Post Office will ensure cash is sent to their home using Royal Mail Special Delivery and that it arrives by 9pm the following day.

‘This means that those individuals who must avoid leaving the home because of the risk of infection receive the cash that they need.

‘The Post Office has repurposed part of its foreign exchange cash delivery business to enable the overnight delivery of sterling cash and meet demand.’

The Post Office is currently considering how to make this cash delivery service available to banks, building societies and credit unions too.

It has already given them details of two of two other products – Fast PACE and Payout Now – which can be offered to customers who are self-isolating and require cash.

The former is a a pre-authorised cheque service, where customers can name an individual, such as carer or family member, to cash a cheque on their behalf at a Post Office branch.

The latter is a one-time voucher service where a barcode is sent via text, email or in the post, and can be exchanged for cash in any Post Office.

 The Post Office adds: ‘Postmasters and branch staff have been working around the clock to ensure that branches have largely remained open across the network, facilitating vital access to cash services in communities up and down the country. 

‘On average, 90 per cent of our branches have remained open providing essential services.

‘Prior to lockdown, Postmasters and their staff have been encouraging Post Office Card Account customers to either to set up a permanent agent to access their account on their behalf (of which we now have nearly 100,000) or to switch their payments to a regular bank account if they have one. 

‘The permanent agent process can now be completed over the phone instead of requiring someone to go into branch – customers should call the Post Office Card Account helpline [see box above] to set this up.