Private Pension and Pension Credit

marke161 · 17 August 2015 at 2:01PM

Hi Everyone,

I'm new to the site and was hoping someone might have an insight into a concern I have with my father's impending retirement.

My father has been receiving Pension Credit (guarantee credit) for a few years but is now approaching his pension age.

He has claimed his state pension and will be in receipt of a very small private pension too.

His options with regard to his private pension are as follows:

A) Take a tax-free lump sum of just over £7000 and receive an annual annuity which equates to around £21.00 per week.

or

Do not take the lump sum and receive an annual annuity of around £36.00 per week.

We are just not sure how this might affect his Pension Credit (guarantee credit) though. If he selects option B he will exceed the threshold for guarantee credit of £230.85 per week hence he won't get guarantee credit. However; if he selects option A his income will fall around £3.00 a week short of the guarantee limit hence he should be able to continue with guarantee credit.

I was just wondering if my father selects option A will the Pension Service stop his guarantee credit on the grounds of breaching notional income rules?

Any advice would be helpful. I've rung the Pension Service who seemed confused when I asked and I've had conflicting advice.

Many thanks

Mark