Having a private pension is NOT a good idea.

maureen_04

My sister-in-law is on DLA and also receives IS, IB plus rent and council tax rebates of 100%.
She has now reached the age whereby the pension she has with her old employer is due to start being paid.
By now receiving her pension her monthly income has now risen above the amount that would allow her to get IS.
Now she finds she will no longer get housing benefit, council tax benefit, or any free dental or optcian fee's or free perscriptions.
In effect paying in for this pension appears to have made her worse off by the sum of almost £300pm. Surely this cannot be right, she can't afford to live now, and will struggle to keep the roof over her head.
Any thoughts. :mad:

dunstonh

Its not a good idea if you dont save a lot and then have to rely on benefits.

There is a small window where you lose benefits and you may not have enough income. If you dont have a lot then a pension income does not reduce your benefits income £1:£1. So, a small amount can actually be a good thing. However, if you are just under the limits before the pension then receiving the pension could take you well over. Or the amount of the pension may be of a level that is considered enough to live on and no longer puts you below the breadline for which benefits are there to protect the most hard done by.

Most people find themselves either side of this (i.e. under the limits still or well through them due to sufficient provision). Your sister in law may be in that minority stuck in the middle.

There are ways to help bring yourself back into benefits again. Such as taking an income with indexation. Include spouse pension and go for maximum guarantees. All these can bring the monthly income down and bring you back under the threshold for benefits again.

How much is the pension?

sleepless_saver

Is she getting her state pension yet?

Premier_2

maureen_04 wrote: »

Having a private pension is NOT a good idea.

If she didn't pay into the private pension, but kept the money in a savings account, the value of it would only be about 50-75% of the current pension pot value (assuming she managed to get the same returns)

Even so, it would probably amount to tens of thousands of pounds in available savings, meaning she probably wouldn't have got her benefits she received earlier either.

Of course, if you mean she should have squandered her earnings at the time so that she has no income or savings now, allowing her to live of the earnings of others, that may well be true ... but that is an approach Cameron is hoping to try and change.

getmore4less

Was there no option to defer the pension?

bendix

Having a private pension IS a good idea.

To suggest otherwise - simply because it means you lose the chance to spend other people's tax - is utterly irresponsible.

dunstonh, old boy, what on earth are you thinking?

novice-saver

>> dunstonh, old boy, what on earth are you thinking?

I think he's telling the truth.

A bit inconvenient/embarrassing sometimes, but it needs to be said.

Baz_2

bendix wrote: »

Having a private pension IS a good idea.

To suggest otherwise - simply because it means you lose the chance to spend other people's tax - is utterly irresponsible.

dunstonh, old boy, what on earth are you thinking?

Would you say the same thing if it was your mum in this position?

Just because you have plenty of money and don't need to rely on benefits doesn't give you the right to judge people. Its easy to take the moral high ground in such a position, if your situation were reversed though there's no doubt you would be asking the same thing.

To the OP, ignore him, this is the sort of drivel you find in most of his posts.

bendix

Baz wrote: »

Would you say the same thing if it was your mum in this position?

Just because you have plenty of money and don't need to rely on benefits doesn't give you the right to judge people. Its easy to take the moral high ground in such a position, if your situation were reversed though there's no doubt you would be asking the same thing.

To the OP, ignore him, this is the sort of drivel you find in most of his posts.

Oh stop your whiney bleeding heart liberalism. If I have 'plenty of money' it's because I worked for it, and I sacrifice today to build savings for myself in the future.

The fact of the matter for the OP's mum is very simple. She has done the right thing and saved for her future. She took personal responsibility. That she has enough to support herself and reduce her dependency on benefits is a good thing, yet the tone of this thread is that she should, instead, have not bothered saving so she can be at the total mercy of the state going forward.

I dunno if you've been living in a cave recently, but the golden age of welfare dependancy is being abolished. And good job too. Anyone giving advice to not save for their own future and isntead rely on state support is doing every other poster a grave disservice.

purch

Having a private pension is NOT a good idea

Is this piece of "advice" meant to be taken seriously.

Milarky

maureen_04 wrote: »

My sister-in-law is on DLA and also receives IS, IB plus rent and council tax rebates of 100%.
She has now reached the age whereby the pension she has with her old employer is due to start being paid.

By now receiving her pension her monthly income has now risen above the amount that would allow her to get IS.
Now she finds she will no longer get housing benefit, council tax benefit, or any free dental or optician fee's or free prescriptions.

Any thoughts. :mad:

You don't just cease to be eligible for Housing and Council Tax Benefits when your income exceeds IS level - there is a tapered reduction [65% and 20%] meaning that, ex-IS, you should be no worse off than before. The other area is savings; if a lump sum was paid out which takes savings to in excess of £6000 [or £10000 if aged 60] there will be additional reductions in benefit (based on assumed income from capital) If the capital exceeds £16K eligibility DOES cease forthwith.

Make sure that your sister-in-law is assessed by the Local Authority rather than DWP to see if a continuing claim for reduced HB/CTB is possible.

On a brighter note, if she receives IB based on contributions alone, this continues to be paid as does the DLA. In other words IS was the 'top-up' benefit and that's all that gets taken back. Thereafter HB/CTB is tapered away or lost altogether if capital is too great.