Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Angelajoy1961
    • By Angelajoy1961 7th Oct 17, 12:55 PM
    • 10Posts
    • 1Thanks
    Angelajoy1961
    Pension funds to clear debts affect benefits ?
    • #1
    • 7th Oct 17, 12:55 PM
    Pension funds to clear debts affect benefits ? 7th Oct 17 at 12:55 PM
    Hi all, I'm considering using some of my pension funds to clear my credit card debts but am concerned this might affect the benefits I receive if £10,000 appears in my bank account. If I can prove I've used it to pay off debts should I be okay ? TIA
Page 1
    • pmlindyloo
    • By pmlindyloo 7th Oct 17, 12:59 PM
    • 10,902 Posts
    • 12,785 Thanks
    pmlindyloo
    • #2
    • 7th Oct 17, 12:59 PM
    • #2
    • 7th Oct 17, 12:59 PM
    Which benefits are you receiving?
    • Angelajoy1961
    • By Angelajoy1961 7th Oct 17, 1:07 PM
    • 10 Posts
    • 1 Thanks
    Angelajoy1961
    • #3
    • 7th Oct 17, 1:07 PM
    • #3
    • 7th Oct 17, 1:07 PM
    Housing, esa, ctc, child benefit & DLA - soon to be pip. I'm allowed savings of £6000 but would use the full £10000 so would have zero left in my bank.
    • Keep pedalling
    • By Keep pedalling 7th Oct 17, 1:09 PM
    • 4,094 Posts
    • 4,456 Thanks
    Keep pedalling
    • #4
    • 7th Oct 17, 1:09 PM
    • #4
    • 7th Oct 17, 1:09 PM
    Hi all, I'm considering using some of my pension funds to clear my credit card debts but am concerned this might affect the benefits I receive if £10,000 appears in my bank account. If I can prove I've used it to pay off debts should I be okay ? TIA
    Originally posted by Angelajoy1961
    Are you over 55?
    • Angelajoy1961
    • By Angelajoy1961 7th Oct 17, 1:14 PM
    • 10 Posts
    • 1 Thanks
    Angelajoy1961
    • #5
    • 7th Oct 17, 1:14 PM
    • #5
    • 7th Oct 17, 1:14 PM
    Yes, I have transferred my pension into a drawdown .
    • Keep pedalling
    • By Keep pedalling 7th Oct 17, 1:43 PM
    • 4,094 Posts
    • 4,456 Thanks
    Keep pedalling
    • #6
    • 7th Oct 17, 1:43 PM
    • #6
    • 7th Oct 17, 1:43 PM
    This would not count as savings, but I think it would be counted as income which could affect some benefits and unless you have not already taken your 25% tax free allowance from your pension at least some will be subject to income tax.

    Might be better to pose this question over on the benefits board.
    • HairyHandofDartmoor
    • By HairyHandofDartmoor 7th Oct 17, 5:03 PM
    • 2,250 Posts
    • 10,856 Thanks
    HairyHandofDartmoor
    • #7
    • 7th Oct 17, 5:03 PM
    • #7
    • 7th Oct 17, 5:03 PM
    My DH withdrew his pension recently to pay credit card debts and we have had to repay working tax credits overpaid from previous years, that we were gradually repaying. In addition they have stopped our tax credits for this year.

    I don't think they care what you are using the pension money for. As far as they are concerned it is income.
    My Diary http://forums.moneysavingexpert.com/showthread.php?t=5716867
    Debt in July 2017 = £58,766 DEBT FREE 31 October 2017
    NEW GOALS - Build an Emergency Fund & Loss of Income Fund
    Emergency Fund 1 = £818/Emergency Fund 2 = £203.76
    • determined new ms
    • By determined new ms 7th Oct 17, 7:14 PM
    • 6,609 Posts
    • 38,118 Thanks
    determined new ms
    • #8
    • 7th Oct 17, 7:14 PM
    • #8
    • 7th Oct 17, 7:14 PM
    yes this is income as far as DWP are concerned and your benefits will be reduced accordingly. If you don't tell DWP and are found out it will be treated very seriously
    DF as at 30/12/16
    Wombling '16 £287.33 Roadkill £28.25
    Wombling YTD £2982.2/Roadkill £8.63
    SFDs Oct 13/15 CC saved £2372.50
    • enthusiasticsaver
    • By enthusiasticsaver 8th Oct 17, 12:15 AM
    • 4,851 Posts
    • 9,167 Thanks
    enthusiasticsaver
    • #9
    • 8th Oct 17, 12:15 AM
    • #9
    • 8th Oct 17, 12:15 AM
    As others have said the DWP won't care what you use the pension funds for but the amount you withdraw (£10,000?) will be treated as income. This may affect certain benefits.
    1 week to go until early retirement. Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • sourcrates
    • By sourcrates 8th Oct 17, 12:31 PM
    • 12,691 Posts
    • 12,033 Thanks
    sourcrates
    Hi,

    Can i ask, do you own your own home or rent ?

    There are options for repaying debt, using your pension fund, but both involve an insolvency solution.

    However, if you own a home, it wont be at risk, but will limit your options to just one.

    Have you considered making settlement offers to your creditors ?
    Last edited by sourcrates; 08-10-2017 at 12:38 PM.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Legal advice see : http://legalbeagles.info/
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

2,989Posts Today

6,508Users online

Martin's Twitter