Financial Assessment and Private Pension

Pezza4u

A relative has been having treatment for cancer and now needs care at home. We have a financial assessment from to fill in with her. She doesn't own her house, has around £9k in savings and her state pension. With capital being less than the £23,250 we thought the local authority would cover all of the cost.

However, when trying to find paperwork the other day (she was in hospital) we came across a folder about a private pension she has. No one knew anything about this so it was a surprise and we haven't told her we know, yet.

She is 69 and she could've started using the pension from age 60. They contacted her with the options available but it seems she ignored it for some reason.

We're not sure what to put on this assessment form now. The pension is worth around £22k but would this be classed as capital, meaning she would need to pay for all care to start with? 

On the form when you list capital/income etc it has private pension, would this be asking how much the total pot is or something else? Underneath it asks about annuities, which she obviously doesn't have.

I have read that because she's not touched the pension the local authority would probably just work out what income she'd be getting if she was using it. So it wouldn't be much.

Would she be better off taking the whole pension now, using some for her care and then get financial help. Or take 25% tax free now and then the rest as an income or as a lump sum.

We don't know what the prognosis is, she may not have long (they don't think the chemo is working that well) but then she could have a few years.

She has made a will when she was diagnosed so everything would be left to her sister. Although she's not named a beneficiary on the pension.

Thanks for any advice you can offer.

xylophone

She is 69 and she could've started using the pension from age 60. They contacted her with the options available but it seems she ignored it for some reason.

Do you mean that she was at some point a member of a Defined Benefit pension scheme?

What exactly does the options letter say?

Marcon

I think this is more likely to get well informed answers on the Benefits board and have asked for it to be moved to https://forums.moneysavingexpert.com/categories/benefits-tax-credits

tacpot12

The personal pension isn't classed as capital (although it is capital). Financial Assessments for Care will look at what income the applicant could have received from the pension, rather than treating the pension as a capital amount. 

The local authority will ask the Pension Provider what income the application could receive from the personal pension. The Pension Provider has to provide this information by law, and has to calculate it in a very specific way. 

Your relative might be best advised to withdraw at least the same amount as the local authority is advised they are entitled to receive as income, but it depends on whether they actually need all that amount to cover the shortfall in the care costs that the local authority will not pay. 

Pezza4u

xylophone said:

She is 69 and she could've started using the pension from age 60. They contacted her with the options available but it seems she ignored it for some reason.

Do you mean that she was at some point a member of a Defined Benefit pension scheme?

What exactly does the options letter say?

I don't think so no. The pension is with Phoenix Life and it must've been one that was started years a go when she was working. She was at one place for years before redundancy, then had a couple of other jobs before retiring. Until we speak to her we're not sure. 

The letters only go back about 10 years so we haven't seen anything from when it was started.

Off the top of my head the options letter from 2015 said she could take it all, 25% as a lump sum, take it as income or buy an annuity. The last option was to do nothing and that's the one they defaulted to when she didn't contact them back.

AlanP_2

Are you absolutely sure she hasn't taken it and it is now "empty"?

22k spent over a few tax years would go unnoticed I would have thought.

DRS1

AlanP_2 said:

Are you absolutely sure she hasn't taken it and it is now "empty"?

22k spent over a few tax years would go unnoticed I would have thought.

or a long weekend in Monte Carlo.