A SHAKE-up hailed as the death of the pension book after is getting underway in post offices today.

For the first time, the elderly could have their state pension paid directly into a bank, building society or post office account, rather than over-the-counter.

But the Government will not start writing to pensioners in Swindon, to ask them to choose a new payment method, for at least another month.

OAPs will still be able to receive cash over-the-counter if they wish even after the pension book is consigned to the dustbin in 2005.

Under the system, which goes live today, there are three choices an existing current account, such a basic bank or building society account or the new Post Office Card Account (POCA).

People choosing a basic bank account or POCA will hand in their card at their local post office, telling the cashier how much they wish to withdraw.

The card will be swiped and the customer asked to type in a unique personal identification number (PIN) into a pad on the counter.

Cash can be withdrawn from basic bank accounts at hole-in-the-wall machines or at the post office, but direct debits and overdrafts are not allowed.

However, there have been claims that pensioners are being pushed into opening a normal bank account, instead of helping to support their local post office.

Dave Fenwick, sub-post master at Poetsfield Post Office in Gainsborough Avenue, Wootton Bassett, said the changes will also effect the way child benefit is paid.

He said: "There isn't even a mention of the new post office account on the forms for child benefit. It just asks for details of your bank account.

"All of a sudden, a lady that has been coming to get her money over the counter, may end up with benefits going into a joint account with her husband, which she may not want.

"If people do not take up the POCA, then business could be adversely affected because we are paid for each transaction we carry out.

"But we still need to staff the post office regardless of how much work there is.

"At the moment we can do personal transactions for certain banks, so if customers may keep coming to us.

"But post offices in more out of the way areas may lose business because people might go to the high street."

Already 1.3 million people have been invited to change the way they receive benefits, with 500,000 providing existing bank details and 100,000 opting for a POCA.

The Government has admitted it will have to retain the exisitng system for people who cannot or simply refuse to adapt to the changes.

James Gray, MP for North Wiltshire, has been campaigning for clearer information about the various options for benefit payments.

He said: "I think it is an absolute disgrace. Pensioners and people collecting child benefits very much like collecting their benefits in cash from the post office."