Forced Medical retirement (hope right place)

Nick_Roberts

Hi,
First time poster etc.

My wife is being 'suggested' that she consider medical retirement from the Home Office, she has been offered:

13K pension and 91K lump or 20K pension and no lump.

We have a mortgage and are quite young, 38 with a baby on the way, I feel the smaller pension and lump would be better as can pay down mortgage to 50K and still have 'cash in hand' for home improvements (wet-room, extension etc)
However this is not my main question, I waffle.

I understand she will pay tax on both incomes but what about National Insurance, she has worked since about 16 and having contacted DWP they seem to have no idea.
Would we have to make voluntary subs? would it be taken at source?
What are child tax credits?
Thanks in advance, if any more info needed please ask.
N.

BigAunty

Does your wife have mobility or care needs? If so, look at the Direct Gov website for Disability Living Allowance as this isn't means tested.

You should also look at the ESA section (employment support allowance) to see if she would qualify for a year's contribution based payment.

The Direct Gov website should also have a link to pensions and hopefully a contact number so she can find out about NI contributions for her to qualify towards a state pension.

Note that in the future when tax credits are scrapped and rolled into the Universal Credit system that should start rolling out in the next year or so, child/working tax credits will have the same kind of means tested capital threshold as Income Support. Therefore savings/capital over 6k will impact them and over 16k will rule out all income based benefits.

HB58

If your wife is entitled to ESA, she would continue to receive NI credits even after the ESA money stopped (as long as she continued to be classed as unfit for work, which would entail repeated reassessments).

Dunroamin

HB58 wrote: »

If your wife is entitled to ESA, she would continue to receive NI credits even after the ESA money stopped (as long as she continued to be classed as unfit for work, which would entail repeated reassessments).

She won't be eligible for ESA if she's getting a pension.

clemmatis

Dunroamin wrote: »

She won't be eligible for ESA if she's getting a pension.

I thought she would be eligible for ESA but that would be reduced in amount -- or even be zero -- but NI entitlement would remain. Have the rules been changed?

OP, I suggest your wife asks her trade union for advice on all this.

HB58

Dunroamin wrote: »

She won't be eligible for ESA if she's getting a pension.

She can still have an underlying entitlement to ESA (and hence NI credits) even if the pension is high enough to mean no actual ESA payments.

Dunroamin

Sorry, I meant actually getting any money - I wasn't thinking of the NI credits as she'll get these through being at home with the new baby..

HB58

Getting a pension doesn't automatically mean no ESA money - although I agree that this is likely given the level of the pension the OP's wife will get.

sleepless_saver

Nick_Roberts wrote: »

Hi,
First time poster etc.

My wife is being 'suggested' that she consider medical retirement from the Home Office, she has been offered:

13K pension and 91K lump or 20K pension and no lump.

We have a mortgage and are quite young, 38 with a baby on the way, I feel the smaller pension and lump would be better as can pay down mortgage to 50K and still have 'cash in hand' for home improvements (wet-room, extension etc)
However this is not my main question, I waffle.
.

I know it's not your main question, but do think carefully about this. She would be giving up £7k of index linked pension from age 38 for £91k lump. To put this in context, £100000 will buy an annuity giving about £3k of pension increasing at 3% for a woman aged 55. Your wife would be getting more than twice that, and for an additional 17 years as she would be starting at age 38. If her health problems are likely to affect her life expectancy, then the sums may look different of course.

You could ask the experts on the pension board for their thoughts on this.

Tax credits - find out about those on direct.gov.