Need some advice regarding 16k saving

JayKay70

Hi all,

Before i start i would like to give some background.

I have worked all my life but some years ago i had a accident and it effected my back and has got me to a point that i could no longer work so i am on the following benefits:

Income Support & DLA (PIP)

I am 53 years old and whilst i was working i had private pensions, and as far as I'm aware i can take out my private pensions when i reach 55?

I have looked into it and it looks that i cannot have a saving of more than 16k in my account or it will effect my Income Support & DLA (PIP).

So if i take out all of my private pension which would be around 60k it would effect my Income Support & DLA (PIP)

Is this correct?

If so would it be best for me not to take out my private pension and leave it where it is until i reach 67 years old (which i think is when the state pension kicks in) so i can avoid the 16k limit?

My main aim is i want to give my private pension to my 4 kids, i don't want it as i believe they will benefit more from it than i will, Ive had my life and they have theirs to look forward too, and this day and age the younger generation (my kids) seem to have been given the short straw.

I am just trying to figure out how i can sort my pension without it effecting what little money i can live on, i.e Income Support & DLA (PIP)

Any advice would be most welcome.

All the best

Jay

Rubyroobs

Whatever means tested benefits you are on you cannot just give money away and continue to claim benefits as it would be considered deprivation of assets. So you don't need to claim your private pensions until you are state retirement age but once you do you would need to live of any lump sums. If you think that when you reach pension age you won't be eligible for any means tested benefit ( pension credit etc ) then that is ok but you should also consider whether you may need some to pay for care in later life especially as it could be reasonable that as you are already disabled , this may be likely at some point.

peteuk

PIP is not means tested, so having capital of over £16K wont affect it.

Having over £16K your income support will stop.  Once your capital is less than £16K you can then claim UC as you are no longer able to start an Income Support claim.   However if your capital is above £6K then any UC claim will be reduced by £4.35 for every £250 until you get back past to £16K when it will stop your claim. 

Certain payments are acceptable to reduce your capital, however it is generally accepted that if you find yourself with over £16K in capital then you use this to life off until it is below the £16K level.

Spoonie_Turtle

Means-tested benefits such as Income Support, UC, Pension Credit are based on whether you have what the government views as the means to live. 
If you access your £60k pension now, then you will be deemed to have the means to live and will be expected to use it for that purpose. 
If you give it away they will likely decide you've deliberately deprived yourself of capital in order to retain entitlement to means-tested benefits and you'll have nothing to live off except your PIP or DLA (whichever one it is you claim - they are two separate benefits but for the purposes of your question it doesn't matter which one you claim, as neither one is affected by savings).

[Equally, if you were to access a regular income from your pension before State Pension Age then that would be deducted in full from your means-tested benefit so you would likely not be financially better off (unless the payment were more than your income-replacement benefit) so if you did that you may be draining your pension for no reason.]

It's noble that you want to give your children a helping hand but the state views it as your money that should be used for you.  And I'm sure your children would rather you be comfortable and well looked after as you get older rather than you struggling because you've given them your financial cushion.

huckster

By 2028 I think the Government plans to move people off Income Support over to Universal Credit. But plans may change if the Government changes.

In regard to pensions and withdrawing large sums, I would suggest that you get independent financial advice. What about the tax implications of doing this ? There may be better ways of handling the money, where you can withdraw smaller amount avoiding tax and if you want to, gift smaller amounts to your children if that is what you want to do.

njkmr

At 53 you have a whole lot of life left to live.
Your kids will find their own way and will probably prefer you to be comfortable rather than take money from you.
Good luck.

Alice_Holt

Not a good idea, as:

i)  All your income related benefits -  Income Support, Housing Benefit, Council Tax reduction (and Universal Credit) will end.  The DWP will assume (deprivation of capital) that you still have the money (long after you have given it away) and you won't be able to claim UC for many, many years.
So, could you survive on your disability benefit  (PIP / DLA) alone?  What happens should your PIP be stopped / reduced following a flawed assessment. Would your children be able to support their destitute father?

ii)  Have you looked at what your income and prospects would be in retirement?

iii)  Taking out all your pension in one tax year, would give rise to a substantial tax bill.  You won't realise the cash sum you anticipate.

Be aware that the DWP are intractable about deprivation of capital rules, I've seen such a DWP decision cause homelessness and destitution. Very upsetting as we attempted to formally challenge the decision (albeit on rather weak grounds) only for the client never to return (and not be contactable) during the appeal waiting period. 

JayKay70

Thanks all for the replies.

Please correct me if I'm wrong....

So if i was to keep my private pension where it is and not touch it until I'm 67 i would still be getting my income support until i reach 67 and then it will stop?

And once i reach 67 i would not get any pension credit due to my private pension so i would use my private pension to survive?

If that is the case then for obvious reasons i cannot give my children anything because i will need that to survive.

KxMx

Income Support claims are being migrated to Universal Credit, so at 67 you will be getting UC and yes that will stop. 

At 67 you will get your private pension + state pension. 

JayKay70

KxMx said:

Income Support claims are being migrated to Universal Credit, so at 67 you will be getting UC and yes that will stop. 

At 67 you will get your private pension + state pension. 

I'm totally confused, i thought i read the previous replies said because i have a private pension i cant get state pension until my private pension money falls below 16k.

As for UC i will be on that in the next couple of months (already received the letter telling me so)

So will i still be getting UC right up until I'm 67 or does it stop at 55 because i have a private pension because they expect me to use that?

Sorry if I'm confusing things and not fully understanding it, my Autism does not help when trying to understand things.

HillStreetBlues

If you have capital over £16k you won't be entitled to working age income benefits (private pension isn't included unless you withdraw monies from it). You will be entitled to State pension no matter how much capital you have. How much SP will depend on how many years stamps you have.