Please help with advice for my elderly dad!

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Hi everyone,
I'm enquiring on behalf of my dad who is 74.
Basically, he was self employed most of his working life. He was declared bankrupt years ago and as a result hasn't paid enough NI stamps to claim a pension, so he now claims income support and housing benefit (he lives in private rented acommodation). He is single and lives on the breadline with no money to spare, and no savings.

He had just found out that he has is a pension plan type thing which has just matured. He paid into this back in the 70's at a rate of £15 a week. He declared it when declared bankrupt but it wasn't affected. He since forgot all about it and it is now wotth approx £25,000. Yippee!

He can take a lump sum of up to £6000 tax free, then place the rest in an investment thingy which will pay him out approx £1500 a year (taxed at source). He turns 75 at the end of January 2016.

His question/worry is this - will it affect his benefits if he takes a lump sum?
Will the £1500 a year pay out affect his benefits?
If so, is there anything he can do so that it doesn't affect his benefits?
Could he 'gift' the money to someone else instead if his benefits are affected?

We would both really appreciate any help you guys can give

TIA
Samm :)
«13

Comments

  • nannytone_2
    nannytone_2 Posts: 12,952 Forumite
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    he can't be on income support as he doesn't meet the criteria, plus at his age he would be receiving pension credit.

    no one can advise until his situation is clear benefits wise
  • Londonsu
    Londonsu Posts: 1,391 Forumite
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    nannytone is right (as usual) people over pension age cannot claim IS if he is on pension credit then yes, its an income based benefit and any extra income could affect it
    see the link


    https://www.gov.uk/pension-credit/eligibility


    Best for him to contact age uk or cab to get further benefit advice
  • p00hsticks
    p00hsticks Posts: 12,983 Forumite
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    Could he 'gift' the money to someone else instead if his benefits are affected?

    As nannytone says, more clarity on what benefits he is getting is needed. However, as a general principal, giving money away when you are in receipt of means tested benefits will be viewed as 'deprivation of assets' by DWP and you will be treated as if you still had the money.

    You can usually have up to £6k in savings (and I think £10k if you are an OAP ? ) before it starts affecting means tested benefits, although you should declare it anyhow.
  • neilvw
    neilvw Posts: 462 Forumite
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    If you're Pension Credit age or over

    If you apply for means tested benefits, money from your pension that you would be entitled to (as well as any money that you withdraw) will be considered when working out your capital and income.

    If you already get means tested benefits they could be reduced or stopped if you don’t take money out of your pension that you're entitled to take. If you don’t take money out, you will be treated as having 'notional income', which means this money will affect your entitlement to benefits.

    If you take a lump sum amount from your pension and spend it quickly then apply for benefits, you might not be eligible because the money you've taken from your pension could be counted as 'notional capital' - this means it's counted as capital when working out if you're eligible for benefits.

    So you should consider the following when deciding whether to take money out of your pension pot:

    - if you take income from your pension pot, the amount will be considered when working out if you're eligible for means tested benefits - so your entitlement will reduce or you could lose your eligibility
    - if you are entitled to take income from your pension and choose not to take it you will be treated as having notional income
    - the more capital or income you take at once the more it will affect your entitlement
    - any money you take out as a lump sum could mean your entitlement gets reassessed
    - if you spend a lump sum quickly and become entitled to more benefit as a result the benefit decision maker could decide your motivation for spending the money was to make sure it didn’t affect your means tested benefits, you could be seen to still have the money and have your benefits reduced or lose benefits

    https://www.citizensadvice.org.uk/debt-and-money/pensions/nearing-retirement/what-you-can-do-with-your-pension-pot/
  • neilvw
    neilvw Posts: 462 Forumite
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    p00hsticks wrote: »
    You can usually have up to £6k in savings (and I think £10k if you are an OAP ? ) before it starts affecting means tested benefits, although you should declare it anyhow.

    Yes, £10k for Pension Credit. :)

    https://www.gov.uk/pension-credit/eligibility
  • Poppie68
    Poppie68 Posts: 4,881 Forumite
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    Hi everyone,
    I'm enquiring on behalf of my dad who is 74.
    Basically, he was self employed most of his working life. He was declared bankrupt years ago and as a result hasn't paid enough NI stamps to claim a pension, so he now claims income support and housing benefit (he lives in private rented acommodation). He is single and lives on the breadline with no money to spare, and no savings.

    He had just found out that he has is a pension plan type thing which has just matured. He paid into this back in the 70's at a rate of £15 a week. He declared it when declared bankrupt but it wasn't affected. He since forgot all about it and it is now wotth approx £25,000. Yippee!

    He can take a lump sum of up to £6000 tax free, then place the rest in an investment thingy which will pay him out approx £1500 a year (taxed at source). He turns 75 at the end of January 2016.

    His question/worry is this - will it affect his benefits if he takes a lump sum?
    Will the £1500 a year pay out affect his benefits?
    If so, is there anything he can do so that it doesn't affect his benefits?
    Could he 'gift' the money to someone else instead if his benefits are affected?

    We would both really appreciate any help you guys can give

    TIA
    Samm :)




    If he is living on the 'breadline' why would he gift the money? Your not looking for validation so he can commit fraud are you!
  • nannytone_2
    nannytone_2 Posts: 12,952 Forumite
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    i don't know a lot about pensione credit, but there can be an assessed income period, when all addition money can be ignitor.
    you would need to look this up.

    agreed with above though... why would someone without money give it away?

    also, people of pension age do relatively well from benefits.
    its a minimum if around £140 a week plus housing and council tax benefit, plus winter fuel allowance
  • marliepanda
    marliepanda Posts: 7,186 Forumite
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    Guys, he's not gifting the money, he's 'gifting' it.

    Committing fraud then?
  • samm.michele
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    Hi guys, thanks for all your responses.
    I apologise, you were all right, he doesn't get Income support, that was my mistake. Just spoken to him and he gets pension and savings credit plus housing benefit. But I know he also doesn't get the top rate of pension, plus his HB doesn't cover all his rent, so he has to top it up every month.

    Re. the gifting - no, he's not looking to commit fraud! The reason I asked is because he's planning to take the £1,500 annual payout but whatever is left when he dies will go to me. He was just wondering if he could give an amount now, eg a couple of thousand to help me out, without it affecting his benefits.
  • NYM
    NYM Posts: 4,066 Forumite
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    Can you inherit if he's taken an annuity ?

    I must confess I know nothing about pensions :o
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