Private Pensions and Benefits

GordonStar21

Am disabled unable to work person. Survive on PIP £272 p/m and Universal Credit £700 p/m with bills being £600 p/m not incl  food shopping. I have a Private Pension value £85600 and was gonna take the 25% tax free but then realised I could lose Universal Credit as a whole. Or if i withdraw £6k-16k U/C could be halved or reduced  severely. Am I just better off just taking £5500 if so would i be taxed etc .. is it worth taking anything at all

Marcon

GordonStar21 said:

Am disabled unable to work person. Survive on PIP £272 p/m and Universal Credit £700 p/m with bills being £600 p/m not incl  food shopping. I have a Private Pension value £85600 and was gonna take the 25% tax free but then realised I could lose Universal Credit as a whole. Or if i withdraw £6k-16k U/C could be halved or reduced  severely. Am I just better off just taking £5500 if so would i be taxed etc .. is it worth taking anything at all

I don't think the pensions board is the best place for your question - probably the benefits board? https://forums.moneysavingexpert.com/categories/benefits-tax-credits

Alternatively, one of the advice agencies with specialist benefit knowledge should be able to help. Try https://www.entitledto.co.uk

NedS

If you take a one off lump sum, it will be treated as capital under UC, and as you identify if you have capital between £6-16k there is a reduction in your UC and the claim would close completely for capital over £16k. PIP is not means tested so any pension withdraws would not affect PIP.

The tax situation would depend how you withdraw the money. If you have a pot of £85,600, you can take 25% of that tax free (£21,400) assuming you have not previously made any withdraws. So you could crystallise the whole pot and take £21,400 tax free. Or you could crystallise a smaller amount and withdraw some or all of that. I would suggest you speak with your pension provider and/or PensionWise who will explain your options to you in detail. PensionWise will also be able to explain any effects on means-tested benefits to you.

MSE_ForumTeam5

We've moved the thread to the Benefits board.

Spoonie_Turtle

Have we not just had a thread like this with similar amounts?

HillStreetBlues

There is a deduction of £4.35 per month for every (or part) of £250 over £6k
For example if you had £14,000 there would be he deduction  £139.20 per month  (£14k-£6k =£8k  so  32 lots of £4.35)


Over 16K as NedS stated you lose UC

NedS

Spoonie_Turtle said:

Have we not just had a thread like this with similar amounts?

Yes, same poster (with different user names) is my guess.

poppy12345

There's thread here that was posted yesterday with the same circumstances as yourself. (same person?) Have a read through it because the advice will be the same. https://forums.moneysavingexpert.com/discussion/6436230/25-tax-free-pension-lump-sum-and-universal-credit-lcwra/p1