Sipp Esa and tax

Kim1965

My wife has been ill health retired, recieves some final salary pensions, this reduces her  contributary Esa. Her total income including Esa is 12.5k pa. 
 If we access her Sipp and take it as income, her Esa will reduce further.
  My wife has cancer, it cannot be cured, her chemo is palliative. A ds150 (i think) state her condition is terminal. Am i right in thinking  we can take her sipp (75k)tax free?? If so, would it be a good idea to use our 2x 20k isa allowances either side of April?,  
 Once the money is in isas, i believe we can draw down our "savings"  tax free. I also believe taking money out savings does not affect esa.? 
 Apart from our property (400k) and 50k in cash, the only other wealth is in my pension (dc and db) so I do not think IHT is a problem.
 Is my thinking correct?? Although we are not desperate for her sipp money i am trying to make the best of our finances.

calcotti

Has she claimed PIP? With a DS1500 the claim will be processed quickly and she will almost certainly be paid £627.60 every 4 weeks.
https://www.gov.uk/pip
The claim can be made over the phone. Follow directions to make a claim under Special Rules/terminal illness. 
PIP is not means tested.
If she hasn't done that she should do so asap as a claim cannot be backdated. 

Your question about the SIPP may be better asked on the pensions forum. Or simply ask the pension provider who should be able to advise about the withdrawal options and tax implications.

You are correct that drawing money from savings will have no impact on the ESA payments.

Whether or not it is better for you to inherit money from her through her pension or from an ISA is beyond my area of confidence.

Kim1965

Ok, thanks. I thought i had posted it on the pensions board?
 So im right that drawing from a sipp penalised esa and from an ISA it does not.
 The IHT question is more a considerstion about passing onto our kids.
 How does one move the post?? 

calcotti

Drawing regular income from a SIPP will impact the ESA. Taking a large ad hoc sum from a pension will not affect ESA. If you take several lump sums DWP may decide to treat them as regular sums. 

Even if inheritance is primarily about passing money to children there may be different implications on passing from a pension or an ISA. A modern pension can, I think, be passed to others outside of the IHT regime and if the death occurred prior to 75 taking money from that pension fund would be tax free for the beneficiary. It's a specialist area.

Kim1965

Dc pensions are outside of a person estate and not subject to IHT. 
Thanks for your help, how can this thread be moved to the pensions board or should i just Re type it? 

calcotti

Kim1965 said:

Dc pensions are outside of a person estate and not subject to IHT. 

That's what I thought.

Kim1965 said:

..how can this thread be moved to the pensions board or should i just Re type it? 

Probably easiest just to  start a new thread on the pensions board regarding the SIPP.