Pension pot counted as savings?

Loz01

Hi everyone

My Mum is 65 and has just retired a week ago. She gets £146 a week from her state pension and also PIP. Ive been trying to investigate pension credit for her but cannot seem to find out (even from the people themselves) about savings.

She has a private pension pot from when she was divorced that she recently took a quarter of tax free as per the government allowance. I think it was about 9k (the amount she took). She used most of this to pay off her mortgage and buy her car as she had a 3 year Peugeot deal so she paid off the rest and kept it.

When I enquired about pension credit, the first guy I spoke to told me that its only INCOME that is counted. So if she isn't doing a "draw down" on the pension pot, then its not income.
The second person told me that it IS income because she can access it any time and if she's choosing not to use it to live on then thats not pension credit's responsibility to top up her money to £155 a week or whatever the amount the government says you need to live on as a single person.

Can anyone clarify?

anmarj

If she can access it, and is choosing not to, it can be classed as notional income, in other words if say it was worth £20 per week income, that would be used in the calculation, she does not have to draw it, but she would be treated as being in receipt of it.

Loz01

Thank you - the pension credit helpline actually told her that it didn't count as income and this is why I'm trying to clarify! But how do they work out how much per week you would get, how do they know how long people will live?! So forty grand divided by 10/20/30 plus years? It's a shame she can't get it as even tho it would've been a tenner a week, she's paying £1600 a year council tax which you get reduced if you claim PC!

xylophone

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

Your mother is over PC age and has a state pension and a private pension that she can access.


"Once you (or your partner) reach the qualifying age for Pension Credit, you are expected to use your pension(s) to help support yourself. If you choose not to buy an annuity after reaching the qualifying age for Pension Credit, an amount of “notional” income will be taken into account
when your benefit is worked out. “Notional” income (in this case) is an amount equivalent to the income you would have received if you had bought an annuity.

If you take an income from your pension pot, the amount which will betaken into account when assessing your benefit will be the higher of the actual income or notional income.

If you take a cash lump sum, this will be taken into account as capital."

anmarj

Loz01 wrote: »

Thank you - the pension credit helpline actually told her that it didn't count as income and this is why I'm trying to clarify! But how do they work out how much per week you would get, how do they know how long people will live?! So forty grand divided by 10/20/30 plus years? It's a shame she can't get it as even tho it would've been a tenner a week, she's paying £1600 a year council tax which you get reduced if you claim PC!

Your mum would have to either provide the letter she would of got from the provider giving her the information, which details her options or your mum could sign a form called PPR1 which would enable the Pension Credit to contact the provider directly.

Under PC the claimant is expected to claim all other income due before claiming PC, which is why it applies

Alice_Holt

Because your mum gets PIP, the applicable amount for eligibility to Pension Credit may be greater than £155. She may also get a PC disability premium of £61.85 as she receives PIP:
http://www.disabilityrightsuk.org/pension-credit-pc

You could check this by using one of the entitlement calculcators:
http://benefits-calculator.turn2us.org.uk/AboutYou

If she lives alone, gets a Daily Living PIP award, (and no one claims carers allowance for looking after her) , it would be worth her putting in a PC claim now.
I don't know how much DWP would deduct for her deferred pension entitlement, but it would be unlikely to be more than -
£155.50 + £61.85 - £146 = £71.45pw.

On a £40k pension fund, £3,700pa represents a 9.2% rate.
If the DWP assume a 5% annuity rate, on a £40k fund this gives a notional entitlement of £38pw.
So PC would be 155.50+61.85-146-38= £33 pw.

Alice_Holt

Incidentally, if you have time put in a complaint / write to your MP about the advice that DWP gave you on your first call.
Increasingly DWP staff appear to make facts up because training / organisation / quality control is inadquate.
It is a very poor state of affairs when you have to ask the question on a public website to make sense of what the "experts" at DWP told you.

And, as for the length of time you have to wait on the phone to speak to a DWP employee.......:(.

xylophone

Previously discussed here - https://forums.moneysavingexpert.com/discussion/comment/70801868#Comment_70801868

OP - is your mother's PIP still as indicated in your previous post?

Have you read the Age UK booklet to which I linked?

elmer

Your Mum can apply for a Council Tax reduction on the basis of her low income, she doesn't need to be claiming Pension Credit to claim Council Tax reduction.

Many councils allow you to claim online now, so maybe ask her to make a claim asap.

elmer