Big change for hundreds of thousands on Universal Credit and state pension pushed back until next year

BRITS who use the Post Office to claim benefits can continue to do so for an extra year after the government delayed closing the accounts.

Post Office card accounts are used by those who don’t have a bank account to access their benefits or state pension.

The Department for Work and Pensions (DWP) announced today that Post Office card accounts will remain open for a further year.

They were previously going to be closed on November 30 this year after the DWP decided not to renew its contract.

The scheme has been extended due to the disruption caused by the Covid pandemic, to give users more time to make new arrangements.

Customers who currently receive payment into a Post Office card account will be sent a letter telling them the service is ending.

The DWP is encouraging those who are able to open a bank account to do so before the new deadline of November 2022.

If they can't, they will be transferred to the Payment Exception Service, which allows them to choose how they receive their payments.

This will allow access to benefits, such as Universal Credit and the State Pension, through the PayPoint network.

Users will be automatically moved to this service unless they provide the DWP with new bank account details before the deadline.

Around 382,000 people use a Post Office card account, which can be used to withdraw funds with no fees or charges.

Pensions minister Guy Opperman said: "While the vast majority of pensions and benefits are paid directly into peoples’ bank accounts, some people prefer to collect their payments over the counter at their local Post Office.

"This extra time means we can support our most vulnerable customers to move to the payment method that will suit them best – even if that means making sure they can still get cash via the Post Office using a card from the new Payment Exception Service."

What happens when the Post Office accounts close?

You have two options, you can either have the payments made to a bank account or you can use the Payment Exceptions service.

If you want your benefits payments to be made to a bank account then you will need to tell the DWP your bank account details.

You can do this over the phone by calling 0800 085 7133 or by post if you get a letter from the DWP or HMRC.

You also need to tell the Post Office to close your card account – make sure you withdraw any money first.

You can do this by completing an account closure form at your local Post Office, or calling 0345 722 33 44.

If you are unable to use a bank account then you can use the Payment Exceptions service.

If you do not contact the DWP with new bank account details then you will be automatically moved to the Payment Exceptions service.

You will be given a unique code, which you can use it at either at a pay point retail outlet or the post office.

You can use the Payment Exceptions service either by using a payment card, voucher by email, or text message containing a unique reference number.

To access this service you will need to speak to your local benefits office, or respond to the letter about the Post Office card account closures that you received from the DWP. 

​​How do I open a bank account?

The government's MoneyHelper service says you have three options for a new account:

  • current account
  • basic bank account
  • prepaid card

A basic bank account is designed for people who don't qualify for a bank's current standard account – for example, they've got poor credit history and have experience of serious money problems.

Pre-paid cards can also be used if you can't get a current account, but Martin Lewis has warned that they often come with expensive and unnecessary charges.

All three types of account can be used to deal with day-to-day spending and paying bills, as well as getting your benefit payments.

It's worth comparing the different types of bank account to work out the best option for you.

You can check out MoneyHelper's guide to choosing the best bank account for benefit payments.

Here we explain all you need to know about finding a basic bank account and how to get accepted.

If you need help opening an account or are affected by the Post Office card account closures you can find free and friendly help from the following services:

  • Citizen's Advice
  • Turn2Us

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