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  • 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
    • 10,760 Posts
    • 12,638 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
    • 3,758 Posts
    • 4,024 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
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    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
    • 1,446 Posts
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    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
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    • determined new ms
    • By determined new ms 7th Oct 17, 7:14 PM
    • 6,541 Posts
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    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
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    • enthusiasticsaver
    • By enthusiasticsaver 8th Oct 17, 12:15 AM
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    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.
    Countdown to early retirement on 21.12.17 2 months to go.
    • sourcrates
    • By sourcrates 8th Oct 17, 12:31 PM
    • 12,213 Posts
    • 11,659 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.
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