New Style ESA and Pension Options.

PeterHoffman

I am on the new style ESA. (1 year) I am within a group and have my NI paid. (I have already contributed 28 years) I want to take a lump sum from my Pension (55 this month) and go for a Flexi-access drawdown. I take the 25% tax free and then have full acess to lump sums when required. The new ESA says I can have savings over 16,000 and the 25% is going to be 17,000.

I am unsure if this is going to affect my ESA payments, but my point is the money will be withdawn to to give to my father as I owe him for paying off my Mortgage off which will be about 13,000. Could this be seen as savings even if I'm to take it out within, let's say, 7 days of deposit?

I have seen another post here which was I think based on the old style of some compensation claim, and that the DWP would ignore the first 53 days??

I need to discuss with my pension holders if the Flexi-access drawdown is seen as a bank account of savings, and whether or not I should go for Partial pension encashment, that might see those not as savings but still as invested funds? Any information would be appreciated.

Alice_Holt

If your ESA is contribution based (and not income-based) as is likely with New Style ESA then any savings are ignored.
So it wouldn't make a difference to your ESA how much of a lump sum you took from your pension scheme.

Once any size of lump sum is taken from your pension, it will then be classed as capital and loses all the tax benefits of a pension fund. 



Note that any drawdown of pension income will affect your ESA.
https://www.gov.uk/employment-support-allowance/what-youll-get#:~:text=you get paid-,If you get New Style ESA,your ESA payments each week.