Merchant navy disability pension.

Tess11

Hi hoping someone can  give us some advice .  My partner and I are disabled and in receipt of non contributary  ESA  and PIP ,  My partner has been awarded a disability pension and a lump sum from the Merchant navy ,  Its a small pension  of around three hundred pound a month and the lump sum is one hundred and ten thousand,
How will this impact on our ESA , 

molerat

This is more a question for the benefits forum (and I have requested it be moved).

The pension lump sum seems rather large - is it all pension or compensation ?

Archie_Duke

Sounds like an amazing payout that should mean you won’t need the ESA to live on for a while. You may want to get this post moved to the Disability Money Matters forum,as it’s mainly a question about that and not pensions. https://forums.moneysavingexpert.com/categories/disability-money-matters
I’m sure Citizens Advice would be able to help too.

NedS

It will depend on your ESA award.

Any income-based ESA award will end as you now have capital over £16,000 given the lump sum.

If there is any entitlement to contributions-based ESA, this will continue. The first £85/week of pension income is disregarded, and anything above that will be deducted from any Conts based ESA. It sounds like the pension is less than £85/week so would be fully disregarded for conts-based ESA.

Your partner should contact DWP and declare the pension as soon as they become eligible for it.

There will be no effect on their PIP.

Tess11

 Its  due to a court decision on who are entitled to disability and so was backdated, Seems like a lot of money but we are both only 52 and 54 . Thanks for the replies, 

NedS

Tess11 said:

 Its  due to a court decision on who are entitled to disability and so was backdated, Seems like a lot of money but we are both only 52 and 54 . Thanks for the replies, 

I cannot see anything in the guidance to suggest a pension awarded early on disability grounds would be disregarded, but when you declare the pension to DWP you should tell them the details about how it was awarded and they can decide if it meets any criteria for disregarding.

calcotti

NedS said:

If there is any entitlement to contributions-based ESA, this will continue. The first £85/week of pension income is disregarded, and anything above that will be deducted from any Conts based ESA.

Just correcting this for anyone else reading it (although not applicable to OP based on other circumstances). The deduction for contribution based ESA is 50% of the amount over £85/week (a threshold which has not changed for years).

molerat

Tess11 said:

 Its  due to a court decision on who are entitled to disability and so was backdated, Seems like a lot of money but we are both only 52 and 54 . Thanks for the replies, 

On a side note have you got the tax situation sorted on that lump sum with respect to it being backdated pension payments ?

pmlindyloo

Tess11 said:

 Its  due to a court decision on who are entitled to disability and so was backdated, Seems like a lot of money but we are both only 52 and 54 . Thanks for the replies, 

Do you mean that the lump sum was awarded to compensate you for the monthly pension of £300ish per month which you should have been entitled to since ????(date)
To put it another way, is the lump sum actually arrears of the monthly payments that you should have received?

I agree with NedS ... you should definitely explain the circumstances of this lump sum and ask a Decision Maker to make a decision as to whether it can be disregarded for a period of time and continue to receive your ESA.

Please check whether any of your ESA is contribution based as this could change things.  You can find out by looking at your award letter.

NedS

pmlindyloo said:

Tess11 said:

 Its  due to a court decision on who are entitled to disability and so was backdated, Seems like a lot of money but we are both only 52 and 54 . Thanks for the replies, 

Do you mean that the lump sum was awarded to compensate you for the monthly pension of £300ish per month which you should have been entitled to since ????(date)
To put it another way, is the lump sum actually arrears of the monthly payments that you should have received?

I very much doubt that is the case as a £110,000 lump sum would represent a 30 year back payment at £300/month owing, although I accept there could be a portion of the lump sum that is due to back payment. However, it would appear that the majority, and certainly in excess of £16k, is likely to be a tax free PCLS.

HillStreetBlues

Tess11 said:

Hi hoping someone can  give us some advice .  My partner and I are disabled and in receipt of non contributary  ESA  and PIP ,  My partner has been awarded a disability pension and a lump sum from the Merchant navy ,  Its a small pension  of around three hundred pound a month and the lump sum is one hundred and ten thousand,
How will this impact on our ESA , 

If the lump sum is from a personal injury then you need full legal advice.
As one possible option would be setting up  a trust that would protect that money from means-tested benefits.