Contributory ESA and AVCs

DaisyS

I took early retirement three years ago after having several cancer ops and memory problems and I've been receiving ESA in the support group since then. I'd worked for 40+ years so it's on a contributory basis.

The amount I receive is reduced because I get a small occupational pension.

Last year I needed money for car repairs and household expenses and I found out that two amounts of AVCs I had been saving through work would only get me an income of around £190 each per YEAR. I also had a money purchase pension - again through work- and I cashed that in as well after finding out I would only get £450 per YEAR.

Earlier this week I had a call from the DWP asking me about these amounts received and I'm now terrified that I have done something wrong by not notifying them about them.

However, over the course of my illness, I wrote to the DWP on three occasions saying I was checking my entitlement because I wanted to make sure I didn't claim anything I wasn't entitled to.

The response I received was that they would only need to know about my savings in future if I made a claim for income related ESA.

I was aware that the only thing that was taken into account was a pension but I haven't taken a pension from these AVCs due to the tiny amount I would get per year.

I haven't been able to find any information on the internet about how AVCs are treated if you take them as a lump sum and are in receipt of contributory ESA. Also, I've checked with Aviva's website (one of the funds I had) and that has a paragraph which begins.... "If you receive any means-tested benefits".... increasing your income with money from your pension fund may affect the amount you receive."

I haven't received any means-tested benefits and I haven't increased my income with these lump sums so I understood this didn't apply to me.

Very worried about what will happen next. I relied on the responses I got in writing from the DWP that my savings didn't have any effect on contributory ESA and I regarded these AVCs as savings on which I paid tax.

xylophone

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/417473/pension-flexibilities-dwp-benefits.pdf

http://www.moneywise.co.uk/work-wages/salary-benefits/will-i-still-receive-benefits-if-i-take-my-pension-early

TELLIT01

As you are on Contributions based ESA there is nothing to worry about. The lump sums taken would be treated as capital, not income. Even if you had taken the pensions with a combined income of about £650 per year it would not have affected your benefit. The first £85 per week of pension income is disregarded on Conts ESA.

DaisyS

Thanks so much for your help on this. I'll print out the info on those two links which reassures me considerably. I'll report back on what happens and what the letter says when I get it from the DWP as that might help other people in future.