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, 1:59 PM
    • 10Posts
    • 1Thanks
    Angelajoy1961
    Use pension funds to pay off debts - will this affect benefits ?
    • #1
    • 7th Oct 17, 1:59 PM
    Use pension funds to pay off debts - will this affect benefits ? 7th Oct 17 at 1:59 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
    • poppy12345
    • By poppy12345 7th Oct 17, 2:20 PM
    • 1,539 Posts
    • 1,364 Thanks
    poppy12345
    • #2
    • 7th Oct 17, 2:20 PM
    • #2
    • 7th Oct 17, 2:20 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
    It depends what benefits you recieve? It will affect means tested benefits so paying off debts would be deprivation of capital. More info is needed to help you further.
    • Angelajoy1961
    • By Angelajoy1961 7th Oct 17, 2:24 PM
    • 10 Posts
    • 1 Thanks
    Angelajoy1961
    • #3
    • 7th Oct 17, 2:24 PM
    • #3
    • 7th Oct 17, 2:24 PM
    I receive esa, child benefit, child tax credit, housing and council tax benefit and DLA
    • epitome
    • By epitome 7th Oct 17, 2:30 PM
    • 2,862 Posts
    • 1,776 Thanks
    epitome
    • #4
    • 7th Oct 17, 2:30 PM
    • #4
    • 7th Oct 17, 2:30 PM
    Pension Credit threshold is £10,000 (no upper limit)
    ESA (IR), IS, JSA (IB), UC threshold is £6,000 - £16,000
    ESA (C), JSA (C) ESA (CNC), have no savings threshold.

    If you are on one of the above with a threshold, the DWP will have to consider whether you did this deliberately to get more benefit or remain at the same rate of benefit. Anyone who tells you that "paying this or that or buying this or that" will be seen as deprivation of capital is wrong. It is a decision made by a Decision Maker (DM) The DM will want a letter from you to say what you did with the money and why...they might phone you.

    Even if the money is in your account for half a day you will have to tell the DWP about it and where it went.


    In short, you cannot find out on a forum what is allowed or not allowed because there are no set rules, except the rule that *if you do it with the intent of receiving the same amount of benefit or more benefit - then you will be treated as having deprived yourself of the money - and the DWP will treat you as though you still have that money (even though you don't have it).

    There is another general exception that is generally allowed, is if you use the money to buy yourself a house to live in.

    You can't ask the DWP either, because the very fact that you called and asked them..."is it ok if I pay this or that?" (they won't give you an answer by the way) will tell them that when you did decide to pay it, you were doing it for benefit purposes and it will be disallowed,
    Last edited by epitome; 07-10-2017 at 2:37 PM.
    • pmlindyloo
    • By pmlindyloo 7th Oct 17, 2:30 PM
    • 10,748 Posts
    • 12,628 Thanks
    pmlindyloo
    • #5
    • 7th Oct 17, 2:30 PM
    • #5
    • 7th Oct 17, 2:30 PM
    This is a useful guide:

    https://www.citizensadvice.org.uk/debt-and-money/pensions/nearing-retirement/what-you-can-do-with-your-pension-pot/

    I suggest you get some advice about this. (links for that in the CA advice)

    Whether it is treated as income or capital depends on how the money is taken but there is likely to be an effect on your ESA if it is income based as paying off debts unless they are under legal action is considered to be deprivation of capital.

    You may be better getting some advice about your debts as you are on ESA. There may be different options available for dealing with your debts rather than using your pension pot.

    Child Tax credit and your DLA would not be affected.
    • fatbelly
    • By fatbelly 7th Oct 17, 7:57 PM
    • 11,361 Posts
    • 8,525 Thanks
    fatbelly
    • #6
    • 7th Oct 17, 7:57 PM
    • #6
    • 7th Oct 17, 7:57 PM
    You may be better getting some advice about your debts as you are on ESA. There may be different options available for dealing with your debts rather than using your pension pot.
    Originally posted by pmlindyloo
    This was my thought too - start a new thread on the debt-free wannabee forum and post a soa

    http://www.stoozing.com/calculator/soa.php
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

2,219Posts Today

7,371Users online

Martin's Twitter
  • RT @LordsEconCom: On Tuesday Martin Lewis, Hannah Morrish & Shakira Martin gave evidence to the Cttee. Read the full transcript here: https?

  • Ta ta for now. Half term's starting, so I'm exchanging my MoneySavingExpert hat for one that says Daddy in big letters. See you in a week.

  • RT @thismorning: Can @MartinSLewis' deals save YOU cash? ???? https://t.co/igbHCwzeiN

  • Follow Martin