Am Bratach No. 314
December 2017



 Concern over PO pension accounts

Fresh concerns have been raised over the future of traditional post office services after a recent round of letters to pension holders from the Department for Work and Pensions. The letters, received by a number of Sutherland pensioners, urge them to change the way they receive state pension payments.

An example of a letter sent to one customer, dated November 6, is headed, “We would like to change how we pay you”. The letter goes on: “We are paying your pension into a Post Office card account. We are now asking that you use a bank, building society or credit union account. Most people use one of these accounts.”

The debate over pension payments goes back to 2003, when state pension order books were phased out. At that time, post office card accounts were offered to customers in place of the paper system. According to post office information, this type of account is “made especially for receiving pensions, benefits and tax credit”. Its key benefits include no overdraft, no charges and no credit checks — ideal for people who might struggle to obtain an ordinary bank account due to poor credit history. The accounts have also proved popular among pensioners accustomed to collecting their state pension direct from a post office. For those unable to collect their pension or benefits in person, a second card is available, issued to a nominated person who can collect the money on their behalf.

Although the government’s letter promises that “most bank accounts are accessible at post offices so you shouldn’t need to change how or where you collect your money”, there remain a number of concerns over the way the alteration in service has been handled.

In Lochinver, longstanding postmistress Anne MacLeod said she had only learned of the latest attack on post office card accounts from customers who had received the letter. “I don’t know why they’re phasing it out”, she said. “Is it just to save themselves money? I don’t think they can force you. The way the letter is worded, people think they have to stop using the post office card account.” Is it worrying her customers? “Oh yes. The older pensioners, they don’t want to do it”, said Miss MacLeod. “They like coming into the post office. So many banks are closing and the banks say they can still come and get their cash from us, but a lot of people like to keep their pension separate.”

In Talmine Post Office, Tommy Mackay said that he had been aware of moves towards getting rid of card accounts for some time. “When it changed over from the pension books to the card years ago, there were quite a lot of folk using the cards, but now, not so many”, said Mr Mackay. He pointed out that more and more people are using post offices for banking services due to closures or a reduction in opening hours at bank branches. The Tongue branch of the Royal Bank of Scotland is one of the latest to come under threat of closure. The Lochinver branch closed in 2015.

“I suppose, basically, what they could say is you’re just swapping one card for another and if you’ve already got a bank account it might make things a wee bit simpler”, Mr Mackay said. However, he acknowledged that “a lot of people in their seventies, eighties and more are used to what they’ve got and maybe it won’t be so easy for them to change. If they’re happy with what they’ve got, leave them with it, I think.”

The government justifies the latest move on the grounds of what they call “tackling financial exclusion and helping more people benefit from mainstream banking.” According to Which? the government claims that there are a number of secondary advantages to a mainstream account, such as accessing better energy tariffs via direct debit payments.

A statement issued by a spokeswoman for the Department of Work and Pensions on November 30 suggests that cost-saving may be a major reason for the exercise: “POca [post office card account] is expensive to administer and as we deal with public funds, we have a duty to use the most cost-effective method for issuing customer payments — which is into a bank, building society or credit union account.”

It appears probable that the phasing out of card accounts has been part of a long-term agenda. In 2004, an article in The Daily Telegraph (March 10, 2004) reported “widespread anecdotal evidence that, when pensioners ring up to apply for a Post Office card account, they are actively discouraged from doing so.” In official documents leaked to the newspaper, DWP staff were told: “You should be aiming to get nine out of ten new claimants [to use] bank accounts, with a small proportion paid through Post Office card accounts.” The reason given was that the latter cost up to thirty times more than payments made to a bank account.

A Post Office spokesperson confirmed that, “since September 2015, government departments have been supporting customers, who can, to move from POca to mainstream bank accounts. This is a three year programme which is due to end by November 2018. For those customers who are not able to open a bank account, Post Office card account will remain an option for them as we have a contract to provide this service until 2021.”

In Lochinver, Anne MacLeod sees the narrowing of options as part of an overall attempt to steer people towards receiving information and services in an automated way, removing human interaction and what she calls “freedom of choice”. She cites the notification of dental appointments by text message rather than post or telephone as another instance of such changes, having missed a recent appointment because she had not received the text notification. “You will lose all your services and there’ll be nothing left”, she warns. “That’s what happened with the banks. There’s so much pressure with technology. People are going to lose the art of talking, of interacting, because they’re all sitting looking at screens.”

The importance of post office services has been underlined by the Royal Bank of Scotland’s announcement that sixty-two of its Scottish branches are in line for closure. As well as Tongue, the Highland branches involved include Tain and Wick.

Highlands and Islands Labour MSP Rhoda Grant vowed to fight the proposal, pointing out that, “of the sixty-two RBS closures, thirteen are in the Highlands and Islands where access to online banking is limited and the distance to an alternative bank is prohibitive. It is the elderly and the disadvantaged who are the main users of on street branches and they are the very people who will find it hardest to either access these other forms of banking or be able to travel to the next available bank.” Ms Grant is to write to Royal Bank of Scotland chairman, Ross McEwan, seeking answers to constituents’ questions on the closures.  

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