ESA contribution based and effect if cash a lump of pension

emmpea

Hi, please can anyone give me some advice. I am in receipt of contribution based ESA ( support group) I am 52 years of age, have a small pension from when I contracted out of SERPS, which due to my health, the provider has accepted can be cashed before the age of 55.
It isn't a great amount, only around £24k as a total lump sum- and I need my bathroom adapting, and have a loan to pay off of £12k.
Will cashing any or all of the sum have an effect on my ESA benefit, as obviously I have quite a number of years before my old age pension of 67, and I do not want to jeopardise my ESA payment. I have just received my new assessment forms from DWP, so obviously with new welfare reform,no benefit is guaranteed, although my health is worse now than the last assessment. I do not know at present if I will cash the whole sum of £24k, or in parts.
Does anyone know how the benefit will be effected, or what the official guidelines are? I am totally confused!
Many thanks.

sammyjammy

The lump sum will not have any impact on your ESA, or PIP if you receive this.

bspm

emmpea wrote: »

Hi, please can anyone give me some advice. I am in receipt of contribution based ESA ( support group) I am 52 years of age, have a small pension from when I contracted out of SERPS, which due to my health, the provider has accepted can be cashed before the age of 55.
It isn't a great amount, only around £24k as a total lump sum- and I need my bathroom adapting, and have a loan to pay off of £12k.
Will cashing any or all of the sum have an effect on my ESA benefit, as obviously I have quite a number of years before my old age pension of 67, and I do not want to jeopardise my ESA payment. I have just received my new assessment forms from DWP, so obviously with new welfare reform,no benefit is guaranteed, although my health is worse now than the last assessment. I do not know at present if I will cash the whole sum of £24k, or in parts.
Does anyone know how the benefit will be effected, or what the official guidelines are? I am totally confused!
Many thanks.

I am sure someone more knowledgeable will answer you, all I can do is put it simply.

I am in receipt of Contributions based ESA and PIP Enhanced Care and Mobility , I have quite a little bit more than 24k in savings and none of my benefits are affected.

Hope this helps.

pmlindyloo

The legislation is set out here:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/470890/dmgch52.pdf

Scroll down to 52001 where it says ESa contribution based is not affected by capital.

May I add that it would seem sensible to reconsider what you are intending to do as regards taking your lump sum early. Have you received advice about this?

Have you sought advice about receiving help financially about having your bathroom adapted because of your disability needs?

Do you receive DLA/PIP? If you don't have you looked at the descriptors for PIP to see if you qualify?

Have you received advice about your debt?

There may be different options available to you.

Perhaps a visit to CAB may be a good idea to get some advice particularly since you will be facing a review of your ESA soon and the circumstances may change.

xylophone

Under normal circumstances (there are certain exceptions, mainly to do with protected pension ages), it is not possible to access a pension before the age of 55.

However, if a person is too ill to work, it can be possible to bring a pension into payment earlier than this - the usual option of a 25% tax free lump sum is normally available, with the balance taxed as income before the person receives it.

It would be usual for that taxable portion to be paid as a monthly income, either through an annuity type arrangement or through a drawdown arrangement.

Where a person has a terminal illness such that death is anticipated within twelve months, the whole of a pension can be paid out as a tax free lump sum - this does not appear to be the case with the OP.

It would appear therefore that the OP will receive a tax free PCLS and the balance of the payment will be regarded as income in the tax year that (s)he receives it and taxed accordingly.

The PCLS and taxed portion will appear in the OP's bank account and he will have that sum in capital.

That may affect any means tested benefits that (s)he may receive.

The fact that (s) he will be regarded as having pension income for the tax year may affect his ESA? I don't know.

However, the OP should obtain advice on this matter.

teddysmum

Will the OP have sufficient income when they reach State Pension Age,because the SP will be reduced to account for any contracting out ?

emmpea

Thank you all so much for your replies. This has helped so much, and I have also managed in the meantime to get through to citizen advice, so I now know how I stand.
I have to pay for home adaptations myself, as we own our home outright, and the local council don't have any budget left! It is just for peace of mind, as getting rid of the loan will give us more per month, and to get the Serps as weekly pension it would only give me under £20 per week, and as I have full National insurance contribution I will get a full pension, just without the Serps top up when I get to pension age- God willing!I just think that making life as easy as poss now will be beneficial now and forward. I have had a telephone appointment with pension wise so have looked into the options, they just cannot give any advice on my ESA, which is why you lovely people have helped so much, and I thank you and appreciate everyone taking time out to help me with their comments. The next battle is new Esa50 forms waiting to be completed, and trying to actually put in writing how I feel, when I find it impossible to put into words on a page!

Alice_Holt

Some information here on completing the ESa 50 form:
https://www.benefitsandwork.co.uk/employment-and-support-allowance/esa-claims
https://www.citizensadvice.org.uk/benefits/sick-or-disabled-people-and-carers/employment-and-support-allowance/help-with-your-esa-claim/fill-in-form/
https://www.turn2us.org.uk/Benefit-guides/Work-Capability-Assessment/The-questionnaire-(ESA50)

Would your CAB be able to help / review the form for you?
Be aware of the points system - https://www.benefitsandwork.co.uk/med2/indexxx.php