Income Related Benefits and Pension Plan

LocoLoco

Hello, I wondered if anyone can help me out here?


I'm in the process of setting up a pension for my son, who is disabled. He's only 12, but I thought if I started putting a bit of his DLA into a pension each month now it would give him a little bit extra when he's older.


He is likely to need some sort of supported living arrangement when he's an adult (although to what extent I'm not sure as he is improving as he gets older); whether or not he'll be able to work isn't known; I suspect it's unlikely but as I say he is improving all the time so perhaps he'll be lucky in that regard.


Anyway, what I wondered was, would a pension pot affect benefits he can claim, if he isn't able to work? I know DLA/PIP isn't means tested but things like Income Support are, so would the money in his pension have to be used to live on instead of saving for the future?


Sorry if this is a daft question; I'm finding the more I read the more I realise I don't know!


Many thanks in advance for any responses.

rogerblack

There are several options.
To strictly answer your question - in almost no circumstances does your pension pot affect your ability to claim means-tested benefits. (almost no = not claiming your pension when you could may).

Another option is a trust.
Trusts, where the trust is designed to pay only certain expenses or for certain aspects of life also do not (if properly setup) affect benefit.
To raise a somewhat morbid point - MAKE A WILL.

Any money given directly to him in a will, or put under the control of someone to manage on his behalf as if it were him, will be treated as his own money and will directly affect his means-tested benefits.

Money placed into trust in the will, which is setup to pay certain living expenses (say heating, grocery bills, ...) will not affect them.

Any money he (or someone acting on his behalf as if it were him) can access freely without legal trouble if he blows it all on yellow plastic ducks will generally count as capital from the point of view of means-tested benefits.

A trust is of course more complex to setup, and possibly more costly, but it is far more flexible, and could - for example - go towards any expense, rather than simply paying a given amount at the age of 69 or whenever.

LocoLoco

rogerblack wrote: »

There are several options.
To strictly answer your question - in almost no circumstances does your pension pot affect your ability to claim means-tested benefits. (almost no = not claiming your pension when you could may).

Another option is a trust.
Trusts, where the trust is designed to pay only certain expenses or for certain aspects of life also do not (if properly setup) affect benefit.
To raise a somewhat morbid point - MAKE A WILL.

Any money given directly to him in a will, or put under the control of someone to manage on his behalf as if it were him, will be treated as his own money and will directly affect his means-tested benefits.

Money placed into trust in the will, which is setup to pay certain living expenses (say heating, grocery bills, ...) will not affect them.

Any money he (or someone acting on his behalf as if it were him) can access freely without legal trouble if he blows it all on yellow plastic ducks will generally count as capital from the point of view of means-tested benefits.

A trust is of course more complex to setup, and possibly more costly, but it is far more flexible, and could - for example - go towards any expense, rather than simply paying a given amount at the age of 69 or whenever.

That's very helpful, thank you so much. I'm in the process of setting up a trust for him at the minute; if I've understood what I'm doing correctly (!) I can set the trust up now and when I die the life insurance money plus anything else I have for him will go into that and, as you say, it won't be counted as income (unless he receives a monthly payment from it, I seem to remember reading? I'll have to dig the paperwork out and read it again).


So he could have the trust for the life insurance money plus a pension pot and it shouldn't affect any income related benefits he's entitled to providing I've set it all up properly?


Thanks so much for all the help on this forum, I am wading my way through so much stuff at the moment and it helps enormously to be able to come on here and check I've understood things and ask some questions, thank you.