Re: In debt and wanting to cash in a £7.5k pension to pay some off.

kevinhall67

Hi All

I receive ESA, but am in debt to the tune of £10k, I have spoken to the ESA helpline to see whether I can withdraw the pension to offset most of that debt. But the helpline told me, yes I can withdraw it, I then have to tell them that I've withdrawn it, and it has then got to go to a Senior Decision Maker to whether it will be allowed/or not (deprivation of capital???). It wouldn't be in my hands for more than a week while I pay the debts off. I cannot understand why it needs to go to a Senior Decision Maker which may put me in a worse position. I have always told them when I went over the £6,000 rule and have kept them informed.

Any help on this matter would be much appreciated.

Kevin

HillStreetBlues

kevinhall67 said:

Hi All

I receive ESA, but am in debt to the tune of £10k, I have spoken to the ESA helpline to see whether I can withdraw the pension to offset most of that debt. But the helpline told me, yes I can withdraw it, I then have to tell them that I've withdrawn it, and it has then got to go to a Senior Decision Maker to whether it will be allowed/or not (deprivation of capital???). It wouldn't be in my hands for more than a week while I pay the debts off. I cannot understand why it needs to go to a Senior Decision Maker which may put me in a worse position. I have always told them when I went over the £6,000 rule and have kept them informed.

Any help on this matter would be much appreciated.

Kevin

That is true with IB ESA that paying a debt could be DoC. If you were on Universal Credit then what you want to to is fine as paying a debt is never DoC with UC.

sammyjammy

Is your ESA income based?

kevinhall67

It is IB ESA guys.

poppy12345

kevinhall67 said:

It is IB ESA guys.

Then the advice here is correct. 

HillStreetBlues said:

kevinhall67 said:

Hi All

I receive ESA, but am in debt to the tune of £10k, I have spoken to the ESA helpline to see whether I can withdraw the pension to offset most of that debt. But the helpline told me, yes I can withdraw it, I then have to tell them that I've withdrawn it, and it has then got to go to a Senior Decision Maker to whether it will be allowed/or not (deprivation of capital???). It wouldn't be in my hands for more than a week while I pay the debts off. I cannot understand why it needs to go to a Senior Decision Maker which may put me in a worse position. I have always told them when I went over the £6,000 rule and have kept them informed.

Any help on this matter would be much appreciated.

Kevin

That is true with IB ESA that paying a debt could be DoC. If you were on Universal Credit then what you want to to is fine as paying a debt is never DoC with UC.

Newcad

You say that you do sometimes exceed £6K savings anyway.
To me it seems a bit odd to have that level of savings and that level of debt at the same time?
ie. Why not pay off some debt from the savings before they reach £6k? and then question of  Deprivation would not be an issue. (and you wouldn't have to touch your pension pot).

However:
Generally with 'old stye' Income Related benefits you are only allowed to pay off the minimum that you need to of a debt.

Paying more of a debt than you need to do could be classed as Deprivation of Capital.

As already said that has changed with UC where you are allowed to pay off the whole debt, or as much of it as you like, without that being Deprivation.

So you would be better waiting until you are Managed Migrated to UC before withdrawing any pension and paying off any debts in full.

Have you looked at if you may be better off (or at least no worse off) anyway if you Voluntary Migrated yourself now rather than waiting for Managed Migration?
Then once on UC you could withdraw the pension lump sum to pay off the debts.

As long as you didn't exceed £16k in the bank in total UC would continue, and as long you got the money and paid off the debt in the same monthly AP then UC payments wouldn't even be affected

Put your current details into one of the benefit calculators to check what you would expect to get on UC.
I generally use the EntitledTo calculator, but your choice, or use a couple to double check what each says.
https://www.gov.uk/benefits-calculators

frayedknot

Don't forget the emergency tax you'll pay on a lump sum withdrawal, over £1300 on 7,500. Much better to apply for £6000, you'll get c£5300 after emergency ( i.e month 1) tax and you'll be under £6000 anyway so happy days and you can do what you want with the money.
If you're under the tax threshold at the end of the tax year you can claim tax refund