CB ESA and personal pension income

Stoodles

I see that any pension over £85 per week will reduce Contributions Based ESA.

If I took £300 a month from a personal pension, does anyone know how that is calculated? Would it be divided over the weeks, and seen as £69/week,so no deduction or would it be counted as income in one week, resulting in a deduction in that week?


What about taking the tax free 25% out as a lump sum - would that be seen as income in one week?


Thanks for your help.

pmlindyloo

Stoodles wrote: »

I see that any pension over £85 per week will reduce Contributions Based ESA.

If I took £300 a month from a personal pension, does anyone know how that is calculated? Would it be divided over the weeks, and seen as £69/week,so no deduction or would it be counted as income in one week, resulting in a deduction in that week?


What about taking the tax free 25% out as a lump sum - would that be seen as income in one week?


Thanks for your help.

Pensions are calculated weekly so your monthly rate would be multiplied by 12 and then divided by 52 to get the weekly rate.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/721798/dmgch51.pdf

51823 and 51824

pmlindyloo

The lump sum would be treated as capital and since you are on contribution based ESA this won't be affected.

calcotti

It will be £300/month x 12 months / 52 weeks = £69.23/week so will have no impact on ESA payable.

If you take a tax free sum that is not income. It is treated as capital and ignored for c-ESA.

Obviously if you have any income based benefits they will be affected by income and (possibly) capital.

Stoodles

Thank you so much! I spent ages searching for this and couldn't find an answer, but you pointed me quickly in the right direction.


I'm still weighing up alternatives as our position is going to change a lot over the next year. If I do take this pension income, below the weekly level, should I inform DWP or will they know automatically?



It's actually quite a surprise to me that being Contributions Based, my ESA is affected by pension INCOME- I only started googling after a worried thought in the middle of the night, expecting to find that it made no difference.

Alice_Holt

Stoodles wrote: »

I'm still weighing up alternatives as our position is going to change a lot over the next year. If I do take this pension income, below the weekly level, should I inform DWP or will they know automatically? .

If you do, I'd be inclined to inform them (and keep your letter) - may save any confusion in the future.

Would it be worth booking a Pension Wise appointment?
https://www.pensionwise.gov.uk/en/appointments

calcotti

I would let he DWP know. They will find out eventually and if you haven't told them they may contact you for further information so it's simpler just to tell them.

I would also tell them about the lump sum - but be clear with them that that is what it is and you understand it does not affect your benefit. I say this because I have come across situations where claimants have taken a lump sum which the DWP have found about later and then investigated to check that it was not one of several payments that should have been treated as income.

calcotti

Stoodles wrote: »

It's actually quite a surprise to me that being Contributions Based, my ESA is affected by pension INCOME- I only started googling after a worried thought in the middle of the night, expecting to find that it made no difference.

Unfortunately it comes as a surprise to many. I think the logic (assuming there is any) is that ESA is a benefit for people who are too ill to earn money from employment and that pension income is income from past employment.

wakeupalarm

I thought all income potentially available is counted so that you couldn't choose to take a lower amount from your pension fund just to qualify for ESA.

If you had a larger amount available to you, all of it would be counted whether you took it or not. Is that not correct?

Stoodles

I almost certainly should see Pension Wise, but most of my pension won't be accessible for four years yet. We need to make our decisions when we have more clarity about my husband's redundancy

calcotti

wakeupalarm wrote: »

I thought all income potentially available is counted so that you couldn't choose to take a lower amount from your pension fund just to qualify for ESA.

If you had a larger amount available to you, all of it would be counted whether you took it or not. Is that not correct?

For working age claimants pension funds only fall to be taken into account when income or capital is taken from them. Once a claimant reaches pension credit age then pension funds will be taken into account and a calculation will be made as to what income is to be treated as available to the claimant. (The gap between pension credit age and pension age is closing all the time.)

This approach to pension funds applies to income based benefits too.

Reader friendly information https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs91_pension_freedom_and_benefits_fcs.pdf

Any other approach would discourage pension saving.

Note to OP - if you are approaching retirement age you should check your pension credit age https://www.gov.uk/state-pension-age

EDIT - I think gap between pension credit age and pension age will be completely closed by 5th December 2018.