Housing Benefit capital disregards at pension age 66

NorthTower

I am currently on ESA-support group, due to long recovery from a major illness. I also get Housing Benefit and full Council Tax relief. In a few weeks I reach retirement age of 66, I have just had the letter saying I will get £705.20 per 28 days, ie 176.30 per week. My HB is £106.

I have no savings as such, but I have recently discovered that I have five small occupational pension pots from when I did a lot of job hopping in my youth, with a combined current value of about 22k.

Am I right in presuming this 22k will be deemed capital re my HB claim, and that I am obliged to declare it as a change of circumstances ?

According to the Shelter webpage re assets re HB:

“Over the cut-off age for working age housing benefit:

Under regulations 29(2) and 43, Housing Benefit Regulations (State Pension Credit) 2006 SI 2006/214, for a claimant over the cut-off age for working age housing benefit:

first £10,000 of capital is not counted.

capital between £10,000 and £16,000 is taken into account at a tariff income of £1 per week for each £500 (or part of £500) of capital over £10,000

capital over £16,000 is not eligible for housing benefit unless claimant is in receipt of pension credit (guarantee) where there is no upper limit”

So of my 22k, is it that the first 10k won’t be counted, but I will be docked £24 per week  on the remaining 12k?

And does it matter how I split my 22k between lump sum and annuity – I am currently thinking 50/50? Is it just the amount,  or does how I might choose to take it make much of a difference? Would taking my 25% cash free allowance change how they calculate notional income?

calcotti

I think the rules for HB are the same as for DWP benefits so the pension pots will continue to be ignored as capital. Nonetheless the need to be declared and you are expected to make use of them. If you choose not to take income from them you will treated as having notional income from them as if you had bought an annuity which is not the same as the 'tariff income' you have referred to. Working out what that notional income will be is beyond my capability. If you withdraw a lump sum that will be capital rather than income and be subject to the rules for capital.

calcotti

See
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/236963/hbgm-bp2-assessment-of-income.pdf
P2.671, P2.684 to P2.687

NorthTower

Thanks, as I expected.  I think that I want to take my pots cash/annuity 50/50. So I need to figure out how they calculate the notional income and compare it to the tariff.

Alice_Holt

NorthTower said:

Thanks, as I expected.  I think that I want to take my pots cash/annuity 50/50. So I need to figure out how they calculate the notional income and compare it to the tariff.

      If you draw down your pension pots and take a pension, then it will be the actual income and capital that will be taken into account.

    The notional income tariff is only applied if you do not crystallise your pension pots, and they remained in situ.     

pmlindyloo

Do you receive the Severe Disability Premium with your current ESA?

NorthTower

calcotti said:

I think the rules for HB are the same as for DWP benefits so the pension pots will continue to be ignored as capital. Nonetheless the need to be declared and you are expected to make use of them. If you choose not to take income from them you will treated as having notional income from them as if you had bought an annuity which is not the same as the 'tariff income' you have referred to. Working out what that notional income will be is beyond my capability. If you withdraw a lump sum that will be capital rather than income and be subject to the rules for capital.

Thanks for this, which goes to the heart of my question. Assuming a total pots value of £21k, if I was take out say, £8k in cash, that  and buy annuities with the remaining £13k, would the HB people ignore that £8k, because it is below the £10k capital limit (I have no other savings), or would they reduce my HB by the amount they estimate I would have got from buying annuity with that £8k ? Or is it discretionary? Is the law that I have to prioritise annuity over savings, or what?

NorthTower

pmlindyloo said:

Do you receive the Severe Disability Premium with your current ESA?

No, I don't think so; My support group status changes to work search in the same week that I reach retirement age in a few weeks time.

calcotti

It is your choice how you drawdown the money.

Alice_Holt

NorthTower said:

calcotti said:

I think the rules for HB are the same as for DWP benefits so the pension pots will continue to be ignored as capital. Nonetheless the need to be declared and you are expected to make use of them. If you choose not to take income from them you will treated as having notional income from them as if you had bought an annuity which is not the same as the 'tariff income' you have referred to. Working out what that notional income will be is beyond my capability. If you withdraw a lump sum that will be capital rather than income and be subject to the rules for capital.

Thanks for this, which goes to the heart of my question. Assuming a total pots value of £21k, if I was take out say, £8k in cash, that  and buy annuities with the remaining £13k, would the HB people ignore that £8k, because it is below the £10k capital limit (I have no other savings), or would they reduce my HB by the amount they estimate I would have got from buying annuity with that £8k ? Or is it discretionary? Is the law that I have to prioritise annuity over savings, or what?

        Per my earlier post, if you draw down your pension pots and take a pension, then it will be the actual annuity income and your total savings (including any lump pension sum) that will be taken into account according to normal HB post pension age rules.

     

NorthTower

pmlindyloo said:

Do you receive the Severe Disability Premium with your current ESA?

Yes, I do. I have now discovered this is paid right up to the birthday that takes me to pension age - does this affect my claim in any way/