Pension credit and small Pension problem

demoguy

Hi
Advice needed, I have recently claimed Pension credit at the age of 63 because of Health problems.

My claim was upheld and should start at the end of November.

I was originally told i would get a income of about £147.

I declared a small pension that my old company paid into with B&CE, I did not contribute to this myself.

It stands at about £3,000 which i thought i could not claim until i got to the aged of 65.

The pension people have said they are reducing my pension credit down as i can claim this B&CE money ?

I have no savings or other incomes i understood that under pension credit rules you are allowed £10,000 saving which i assumed again this small amount of pension pot would be classed as savings? and i would still get my full pension credit entitlement.

If i contact B&CE can i take that money out and put into a saving account where i can get interest or is that not allowed?

I understand it's not a lot of money but at my age with no saving every little bit helps.
Any advice would help please

seven-day-weekend

As far as I know, if you have an available source of income that you can access without penalty, you are expected to take it. Therefore the amount of Pension Credit you are entitled to will be reduced.

demoguy

seven-day-weekend wrote: »

As far as I know, if you have an available source of income that you can access without penalty, you are expected to take it. Therefore the amount of Pension Credit you are entitled to will be reduced.

Hi thanks
Yes i do understand about the income part but as i said it is only a lump sum payout pot and it holds £3.000 which i don't get income from, question IS can i take that £3,000 out of pension in lump sum and if so can i put it in savings account instead, and because you are allowed up to £10,000 pound savings under pension credit rules with no penalty it would then be classed as savings and not income ?

Froglet

Yes you can access the pension as a lump sum BUT you will be taxed on it I'm afraid .

http://www.litrg.org.uk/pensioners/life-events/coming-up-retirement/triv-comm

And if you take the normal 25% as tax free and convert the rest into a pension it would be so small as to hardly make a difference.

I would get some expert advice on this,either from citizens advice or a financial adviser (but of course they would normally charge.)

I am sure one of the more experienced posters who frequent this board will give you further advice on this .

xylophone

http://bandce.co.uk/ This?

What kind of pension was it? Can you access it without penalty before the age of 65?

http://www.hmrc.gov.uk/pensionschemes/small-pen.htm Do you mean that you will claim a lump sum on triviality grounds?

demoguy

[/QUOTE]
What kind of pension was it? Can you access it without penalty before the age of 65?
Do you mean that you will claim a lump sum on triviality grounds?

Yes to first.
I have rung them today they said they will send out form for me to fill in just have to be careful re being taxed on it i think?

She told me there was about £3,800 but because i am on pension credit that means i will not probeb' work again, so she said in that case it goes up a bit?
I have no idea what she is talking about really all i really want to do is remove it where i can see it into a savings bank so i have control over it.

atush

If this is your one and only pension, it can be taken as a Lump sum. And would therefor be savings, and your income would be the interest from it. I assume it is going up as the markets are up.

Too bad you didn't commence this pension before claiming pension credit.

demoguy

OK had my letter from B&ce.
Basically saying I have £3,800 pounds in a Lump sum tax free account.
Also a Easybuild stake holder pension of £3,300.

I not sure but i think the stakeholder one is subject to tax ?

Would it be better to draw all out and invest elsewhere?

atush

Both can be taken under triviality rules as they total less than 18K and you are over 60.

Each will be 25% tax free, with the remaining 75% taxed at your highest rate unless your PA is not used up..

demoguy

atush wrote: »

Both can be taken under triviality rules as they total less than 18K and you are over 60.

Each will be 25% tax free, with the remaining 75% taxed at your highest rate unless your PA is not used up..

Would it be better to leave it there or could i do better by removing it and invest in an ISA maybe ?

atush

You could leave it til 65, but you could invest any you withdrew in an ISA if you like. But i'd use S&S isas as cash ISA would do worse than a pension. But you do need some cash for an emergency fund or for replacement or repair of large ticket items.