NHS compensation payment and Pension Credit

Client’s husband died from cancer and NHS Trust has admitted negligence and his widow stands to receive £55,000 in compensation. She currently receives Pension Credit Guarantee Credit, Housing Benefit and Council Tax Support.

The provisions of para.16 of Schedule V (‘PART I Capital disregarded for the purpose of calculating income’) of the State Pension Credit Regulations 2002 allows for the whole amount of the payment to be disregarded indefinitely:

16.—(1) An amount equal to the amount of any payment made in consequence of any personal injury to the claimant or, if the claimant has a partner, to the partner.

However, the DMG states:

84412 The disregard at DMG 84410 [that is the disregard above] does not apply if the injury was to a claimant’s deceased partner1 . Payments can only come within this disregard where the claimant or partner for whom the payment was made themselves suffered a physical and/or psychological injury. If there is any doubt as to what the payment was awarded for, then the DM should request sight of the papers awarding the amount. These should specify on what basis the award was made.

1 R(IS) 3/03

I can’t find R(IS) 3/03 but is seems pretty clear that DWP aren’t going to disregard this payment – this feels very unfair to me, as the client has just lost her husband in very distressing circumstances but now she’s being compensated for that, she stands to lose all of her MTB’s as well.

With WAB’s, it looks as if the PI payment could be disregarded for up to 52 weeks but I can’t see anything similar in the PC regs. Anyone got any ideas on this case, or a copy of R(IS) 3/03 they could share?
http://dlvr.it/S54q7N

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