A VILLAGE sub-postmaster near York fears a lack of awareness about a new pension and benefit payment scheme could severely affect his business.

By 2005, pensions and benefits will be paid into bank accounts by direct debit, replacing the old system of drawing out cash with a Giro slip or pension book.

Last year, the Pension Service sent out letters to customers explaining the change.

But Terry Greenwood, who runs Copmanthorpe Post Office with his wife, Susan, said people had not been made sufficiently aware that they could carry on using a post office to withdraw cash.

Some banks - such as Alliance & Leicester, Barclays and Lloyds TSB - allow customers with current accounts to withdraw cash from their post office using a swipe card.

The Post Office also runs its own card account. But Mr Greenwood said if customers did not know this, their own bank might not allow them to use the Post Office to withdraw money. This could have a severe impact on many post offices.

He said he had already lost 70 per cent of his income from Child Benefit transactions since the payment change was introduced.

His claims come after Government ministers last week said a few "vulnerable" people would be able to opt out of direct debit payments and claim their pension by weekly cheque.

As well as putting "Use us or lose us" posters around his shop, Mr Greenwood said he made a point of telling customers how they can continue using his business despite claiming benefits or pensions by direct debit.

He said: "A big chunk of our income is pensions and benefits.

"Most postmasters are very concerned about what the future is going to be.

"Other business will also suffer if post offices close, because people will need to go into town or another village."

Simon Wilkinson, Department for Work and Pensions spokesman, said the department had written to customers letting them know what direct debit payment options were available.

He said: "We are also enclosing a leaflet which provides comprehensive details of the changes.

The role of the Post Office is clearly set out as one of those options."

The new style Post Office card account is designed for receiving benefits, state pensions and tax credits. Wages and other payments cannot be paid into it.

Some bank accounts, such as mortgage, business, children's and National Savings accounts, may not be suitable for direct debit.

If you have less than £10 in your account, you can still get money over the counter in a bank or building society, depending on the type of account.

You can use your existing account for the new direct debit payments, or set up a new one. Visit your local post office for details of which banks allow you to withdraw cash there.

The Department for Work and Pensions says more than 100 pension order books are stolen each week.

Phone 0800 107 2000 for more details on the new direct debit payment scheme.

Updated: 08:11 Thursday, May 27, 2004