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Pension funds to clear debts affect benefits ?
Angelajoy1961
Posts: 10 Forumite
Hi all, I'm considering using some of my pension funds to clear my credit card debts but am concerned this might affect the benefits I receive if £10,000 appears in my bank account. If I can prove I've used it to pay off debts should I be okay ? TIA
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Which benefits are you receiving?0
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Housing, esa, ctc, child benefit & DLA - soon to be pip. I'm allowed savings of £6000 but would use the full £10000 so would have zero left in my bank.0
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Angelajoy1961 wrote: »Hi all, I'm considering using some of my pension funds to clear my credit card debts but am concerned this might affect the benefits I receive if £10,000 appears in my bank account. If I can prove I've used it to pay off debts should I be okay ? TIA
Are you over 55?0 -
Yes, I have transferred my pension into a drawdown .0
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This would not count as savings, but I think it would be counted as income which could affect some benefits and unless you have not already taken your 25% tax free allowance from your pension at least some will be subject to income tax.
Might be better to pose this question over on the benefits board.0 -
My DH withdrew his pension recently to pay credit card debts and we have had to repay working tax credits overpaid from previous years, that we were gradually repaying. In addition they have stopped our tax credits for this year.
I don't think they care what you are using the pension money for. As far as they are concerned it is income.Finally Debt Free After 34 Years, But Still Need to Live Frugally
Debt in July 2017 = £58,766 😱 DEBT FREE 31 OCTOBER 2017 :T 🎉
EMERGENCY FUND 1 = £50/£5,000. EMERGENCY FUND 2 = £10/£5,000.
CHRISTMAS SAVINGS = £0/£500. SEF = £1,400/£12,000 PREMIUM BONDS ME = £350. PREMIUM BONDS DH = £300.
HOLIDAY MONEY = £0 TIME LEFT TO PAY OFF MORTGAGE = 5 YEARS 1 MONTHS0 -
yes this is income as far as DWP are concerned and your benefits will be reduced accordingly. If you don't tell DWP and are found out it will be treated very seriously
DF as at 30/12/16
Wombling 2026: £25.70
Grocery spend challenge Feb £285.11/£250
GC annual £389.25/£2700
Eating out budget: £ 48.87/£300
Extra cash earned 2026: £1850 -
As others have said the DWP won't care what you use the pension funds for but the amount you withdraw (£10,000?) will be treated as income. This may affect certain benefits.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
Save £12k in 2026 Challenge £12000/£6000
365 day 1p Challenge 2026 £667.95/£220
Click on this link for a Statement of Accounts that can be posted on the DebtFree Wannabe board: https://lemonfool.co.uk/financecalculators/soa.php0 -
Hi,
Can i ask, do you own your own home or rent ?
There are options for repaying debt, using your pension fund, but both involve an insolvency solution.
However, if you own a home, it wont be at risk, but will limit your options to just one.
Have you considered making settlement offers to your creditors ?I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter0
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