Drawdown and benefits

Notebook

Hi
if you place part of a pension into drawdown and end up unemployed, is it considered as part of the 16k rule. 

As judge Judy would say, answer the question, and not go on about this and that judging me. 

Thanks to all who can answer. 

Icequeen1

When you say you have placed part of the pension in drawdown - do you mean you have taken money out your pension and it is available to you? If so, then yes it counts as part of the 16k rule. 

pmlindyloo

Does this link help?

Pension freedoms and DWP benefits - GOV.UK (www.gov.uk)

NedS

If you have crystallised funds within your pension, but have not yet withdrawn them from the pension, then those funds do not count towards the £16k capital limit. Any funds remaining within a pension are disregarded.

Any funds you have withdrawn from a pension (e.g, tax free lump sums etc) and now reside outside of the pension should be included in your capital amounts.

Any regular payments you draw down as income should be declared to DWP and will count as income in the month in which they are received.

tacpot12

NedS is correct and non-judgy.

Notebook

Icequeen1 said:

When you say you have placed part of the pension in drawdown - do you mean you have taken money out your pension and it is available to you? If so, then yes it counts as part of the 16k rule. 

Haven't yet...

TELLIT01

Try to ensure any drawdown keeps available savings/capital below £6k and you won't have any problem with benefits being affected.

Notebook

Thanks all - Tellit01 answered my next question too - !!!!!! lol

Notebook

NedS said:

If you have crystallised funds within your pension, but have not yet withdrawn them from the pension, then those funds do not count towards the £16k capital limit. Any funds remaining within a pension are disregarded.

Any funds you have withdrawn from a pension (e.g, tax free lump sums etc) and now reside outside of the pension should be included in your capital amounts.

Any regular payments you draw down as income should be declared to DWP and will count as income in the month in which they are received.

So - drawing out 5k would ruin that weeks benefit? My house is paid for, but just planning should the worst happen on the job front - as in lose mine - (not get one - lol)

NedS

Notebook said:

Thanks all - Tellit01 answered my next question too - !!!!!! lol

The only thing you need to consider there is that regular draw downs can be treated as income. DWP regulations do not define what regular means, but if you were to draw down £6k every 6 or 12 months, then clearly that is regular, and DWP may decide to treat those draw downs as income rather than capital. A DWP decision maker would decide if any withdraws are regular (and thus treated as income) or not.

So a one off lump sum is certainly treated as capital and not an issue if your capital remains less than £6k, whereas if you are taking small regular lump sums to supplement your income, deliberately keeping your capital below £6k, expect DWP to view that unfavourably.