Pension Credits

truffsie

My neighbour who is aged 56 and single has been employed by the civil service for the last 2 and half years. During this time she has contributed approximately £40 pounds per month into the premium pension plan. The last statement of benefits indicated that she would receive about £1400 per annum at age 60.
As she will have no other income other than this and the basic state pension, she is worried that receipt of the civil service pension, will prejudice her entitlement to pension credit, housing benefit and council tax reduction etc,.
Would it be better if she withdrew from the civil service scheme now and if so would the pension accrued to date be lost?

Any advice would be very much appreciated. Thank you.

dunstonh

What if pension credits are removed/reduced in the future?

Small incomes do not reduce benefits down £ fo £ so there is benefit of making retirement provision. Especially in something like the final salary scheme from the civil service.

DavidLaGuardia

dunstonh wrote: »

What if pension credits are removed/reduced in the future?

Small incomes do not reduce benefits down £ fo £ so there is benefit of making retirement provision. Especially in something like the final salary scheme from the civil service.

I had started the post to correct you and say how apauling the deductions from the minimum income guarantee were , but the following (at least) is one example where it isn't so bad.

If £6,000 is built up in savings there are no deductions. If the grossed up equivalent is built up in pensions i.e. £7,692, £1923 is going to be available. Say the remainder gives 6.5% to a woman age 65 thats 7.21 a week if she has a state pension of £90 then entitlement is extta £27.79. total = £125.00 less minumum income guarantee £119.05 = 5.95. Hence marginal deduction from 7.21 to 5.95 = £1.26 or 17.5%. Since tax relief of 22% applies to all fund (including portion taken as lump sum) this is a winner. As to the lost savings element £6,000 less £1923 = £4,077. £5.95 a week = £309.40 which is 7.6% of that lost lump sum. Figures for men or impaired lives would be better.

truffsie

I understand what you mean about possibility ofpension credits being removed/reduced and about there not being pound for pound reduction but still have the concern that by receiving a small pension she may be ineligibile to receive housing/council tax benefit etc, and by struggling now to pay the pension contribution could in the long term be penalising herself.

roddydogs

Basically if your done anything to help yourself in the way of pension, you lose benefit. only the !!!!less get 100% of pension credit, or whatever!
PS how do you "Withdraw" from a non-contributary pension? why would you anyway?

roddydogs

!!!! shold read "!!!!lesss" i dont understand why i cant post a compleatly viable word-could someone explain? the word begins with f and rhymes with wreckless

truffsie

May I suggest you read the OP correctly roddydogs.

As I have stated my neighbour contributes £40 per month.

The scheme is NOT non-contributory. I posted asking for advice, not for you to make trite remarks.