Will taking a small lump sum and leaving the balance until pension age be a issue with my benifits ?

GJ14

Hi,

Currently not pension age but in poor health and claim PIP ESA and Housing Benifit.

I have a private pension that I don’t need to take yet for another year and a half but would like to take a small lump sum of £6000 out of the pension and do nothing with the balance until pension age in a year and a half.

The pension is worth £18000 so if I took it all I would lose the housing benifit and other benifit but it would go in two years then would have noting left and have to apply again for the housing.

What I am unable to find out is can I take the lump sum and leave the rest so my benifits don’t change or would I be forced to take the full amount or take a monthly amount because the benifits people tell me I have to as I’m depriving myself of capital even though I’m not pension age so don’t have to decide what to do with it yet.

I hope this makes sense the pension is more of a burden having not long learnt of its value it’s come as a shock and am now left worrying know the stress of getting the benifits only for the last two years since I couldn’t work I can’t imagine doing it again as my health deteriorates.

midnight_express

How old are you ?

xylophone

https://www.gov.uk/government/publications/pension-freedoms-and-dwp-benefits/pension-freedoms-and-dwp-benefits

If you wish to access this pension on a flexible basis, ( take 25% PCLS and leave the balance), you may need to change pension providers in order to do it.

TELLIT01

I don't know the practicalities of taking part of a pension pot and leaving the rest, but savings in excess of £6000 will affect Income Related ESA. Payment of ESA would be reduced by £1 for every £250 or part thereof. Capital has no effect on Contributions based ESA.

calcotti

You are not depriving yourself of capital if you take money from a pension pot because a pension pot is ignored and is not treated as capital.A lump sum withdrawal becomes capital but if you do not go over £6,000 in total for your savings then your means tested benefits are not affected. Remember that if your current account has money sitting in it this counts.

If you take monthly payments from your pension this becomes income and will be taken into account for income based ESA and housing benefit. Pension income above £85/week will also affect contribution based ESA.

Your PIP is not affected regardless of capital or income.

When you reach Pension Credit age you will be treated as having income from your pension fund even if you leave it alone.

[Deleted User]

On an 18k pot you can take £4.500 tax free the rest may attract tax, which you might or might not be able to reclaim.

GJ14

calcotti wrote: »

You are not depriving yourself of capital if you take money from a pension pot because a pension pot is ignored and is not treated as capital.A lump sum withdrawal becomes capital but if you do not go over £6,000 in total for your savings then your means tested benefits are not affected. Remember that if your current account has money sitting in it this counts.

If you take monthly payments from your pension this becomes income and will be taken into account for income based ESA and housing benefit. Pension income above £85/week will also affect contribution based ESA.

Your PIP is not affected regardless of capital or income.

When you reach Pension Credit age you will be treated as having income from your pension fund even if you leave it alone.

Thanks for this reply it is how I understood it aswell I just wanted a second opinion to make sure.