SIPP/Personal Pension / Redundancy & Benefits

cloud_dog

Ok so, wasn't sure which board to post this on but...

A friend has been made redundant (they are over 55yo) and during the interview they were asked if they had a personal pension or SIPP which they could begin 'drawing'.

I was a little surprised by this enquiry / approach. Is this reasonable or even legal to go down this route? Or is it an approach to see if the person would be willing to commence 'retirement' rather than receiving benefits (the benefits people didn't specifically ask if they are going/want to retire question)?

TELLIT01

It's certainly legal to consider drawdown on a pension from the age of 55. There are many reasons not to do so, not least the fact that it will reduce the amount received each month.
The problem comes with Income Related benefits where, if a drawdown is possible, any payment can be reduced by the theoretical amount of pension which could be received.

pmlindyloo

TELLIT01 wrote: »

It's certainly legal to consider drawdown on a pension from the age of 55. There are many reasons not to do so, not least the fact that it will reduce the amount received each month.
The problem comes with Income Related benefits where, if a drawdown is possible, any payment can be reduced by the theoretical amount of pension which could be received.

I do not believe this is correct.

If you are under the age for SPC (State Pension Credit) then any possible 'draw down' (i.e not taken) is not treated as notional income/capital (as if you have taken it)

OP, your friend should make an appointment with Pension Wise to consider their options.

https://www.pensionwise.gov.uk/en?utm_source=bing&utm_medium=cpc&utm_campaign=New%201044%20%7C%20Do%20-%20PensionWise&utm_term=pension%20wise&utm_content=New%20%7C%20Do%20-%20PensionWise%20Brand

xylophone

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

cloud_dog

Thanks for the replies, and as ever the useful links.

It wasn't a case of my friend wanting to draw down from the pension it was more the appearance of the benefits office (lose term) enquiring if he would. It was in and around the same conversation of them asking him if he would consider selling his property (family home for wife and two children, he has been separated for a number of years and they are going through divorce so, it may end up being sold anyway).

I was surprised by his comment on the pension enquiry from the benefits office as I thought pensions were off limits in benefits calculations (below age limit); as has been evidenced by the links.