Means tested benefits and pensions

Ciprico

I'm asking on behalf of someone else. They are on various benefits.

Her age is 56 and she has a small private pension set up by a parent but the pension has never been accessed.

Does this pension impact her means tested benefits on the basis it is potentially available as income.

If so, how is the income calculated, as the income could presumably be set to any
arbitary figure ....

Tia

Marcon

Ciprico said:

I'm asking on behalf of someone else. They are on various benefits.

Her age is 56 and she has a small private pension set up by a parent but the pension has never been accessed.

Does this pension impact her means tested benefits on the basis it is potentially available as income.

If so, how is the income calculated, as the income could presumably be set to any
arbitary figure ....

Tia

See https://www.thisismoney.co.uk/money/pensions/article-11443529/How-does-starting-claim-private-pension-affect-benefits.html

This might also be helpful: https://www.ageuk.org.uk/information-advice/money-legal/benefits-entitlements/how-your-benefits-are-means-tested/

JoeCrystal

Only if she is at SPA which then the notional income figure to work out if she entitled to means-tested benefits. No need to worry about it for at least a decade anyway.

NedS

Any assets that remain within a pension are fully disregarded until State Pension Age.

However, the moment you access the pension, either by way of a lump sum withdraw or regular payments, these payments will be taken into account and will either reduce or stop any means-tested benefits (depending on the amounts).

Rattusnorvegicus

The way to use it without impacting means tested benefits, is a one off topup to bring savings+bank acc upto £5,500 (that way you dont risk hitting £6k and a declaration), so you dont have to declare.

A one off access lump sum as savings is fine...but regularish access will be considered income which is a no-no under means testing.

The other thing to consider is not triggering the MPAA if further contributions are to be made.

Its a very narrow tightrope accessing pension and holding onto means tested benefits, and I'd recommend alot of reading before doing so especially the DWP DMG.

Something else occured to me. I use £5k in ISA with an extremly high dividend return (high double digits), paid into my bank. It qualifies as savings, so long as it gets spent within a fortnight.

I use frequent dividend payments to pay bills, food, and anything else. Happily theres a never ending supply of things to burn my dividends on instead of paying them out of any benefits.

All the best.

Simes122

Be aware it’s not just means tested benefits.   Contributions based ESA is in principle not a means tested benefit.  Unless you have an occupational pension, and then it is.  So NI contributions mean nowt for this benefit if you get sick.   This is a huge gotcha for Armed Forces Veterans who have a pension in payment following retirement from the Armed forces, who get ill and by virtue of their service pension, can’t get Contributions Based ESA, despite having made all the right contributions.