Is a SIPP a pension or savings?

NanaBee123

A friend has a SIPP; he is 72 and lives alone in a Housing Association flat; he was receiving Housing Benefit from his local council but they have now decided his SIPP is savings and withdrawn his Housing Benefit and want him to repay £10k in past HB received! He can’t afford his rent and has now gotten into arrears and is at risk of eviction! Can anybody help??

Flugelhorn

there are some other posts on here suggesting that there is an amount that would  be considered as income coming from a SIPP https://forums.moneysavingexpert.com/discussion/comment/78950783/#Comment_78950783

Alistair31

What’s the approx SIPP balance and is he drawing an income?

tacpot12

Regarding the eviction, he can call Citizens Advice and get their help to stop him being evicted, but it doesn't sound like he is in any immediate danger of being evicted. It has to go to court to get a possession order first.  

The SIPP is assumed to produce an income once you have reached your state retirement age. He is supposed to have declared the SIPP if he wasn't drawing anything form it. As the thread referred to mentions, this assumed income is called Notional Income. The local authority that pays HB are supposed to ask the Pension Company how much notional income the client could be entitled to using the GAD Rates as the basis to calculate this. There is a form that the local authoirty completes to request the information, and the Pension Company has to do the calculation and provide the answer by law. The local authority then uses the figure in calculating (or recalculating) someone's entitlement to HB. 

Your friend can ask for the details of the calculation that the local authority have done, but it might need an expert to check this. He can ask Citizens Advice or Age UK if they have someone that can check the calculation to see if it is correct. This figure will include the notional income figure that has come from the pension company. If there is no such figure because the local authority hasn't asked for it, then they aren't doing their job correctly. You can tell them they need to send DWP form PPR1 to the pension provider. The decision that he isn't entitled to HB can be challenged if they haven't done this.  His local councillor may provide support if the benefits team at the local authority are awkward. 

He should be drawing on the SIPP immediately to clear the rent arrears. If he is unwilling to do so, this suggests he is not thinking clearly about his situation, and you probably need to raise a safeguarding concern with his GP and the local authority. If he doesn't have capacity to manage his financial affairs, he might need a deputyship or possibly some advocacy.  

LHW99

May also be worth looking / posting in the Benefits Board, as people there may know more details of the specific rules.

https://forums.moneysavingexpert.com/categories/benefits-tax-credits

Baldytyke88

There is no upper age limit for making contributions to a registered pension scheme in the UK, but the age at which you can receive tax relief on those contributions is capped at 75.

But it would be normal to consider the state pension age when it should be in drawdown?

Exodi

NanaBee123 said:

A friend has a SIPP; he is 72 and lives alone in a Housing Association flat; he was receiving Housing Benefit from his local council but they have now decided his SIPP is savings and withdrawn his Housing Benefit and want him to repay £10k in past HB received! He can’t afford his rent and has now gotten into arrears and is at risk of eviction! Can anybody help??

What is the value of the SIPP?

You can appreciate why the council might take issue if he has a significant pot he refuses to draw from so he can leave it to his heirs, while simultaneously demanding that the taxpayer pays his rent.

Only thing I'm surprised about is how it has seemingly happened so suddenly? Could it be that he didn't declare the SIPP?

I'm not clear why he wouldn't be able to afford his rent, has gone into arrears and is risk at eviction? Sorry to say it, but why wouldn't he draw from his SIPP to pay it?

He's probably like my stepfather - argues any charge, refuses to spend anything, all the while sitting on six figures in savings so he can leave the maximum possible amount to his daughter. My suggestion he should use some of the money on himself falls on deaf ears.

Albermarle

Baldytyke88 said:

There is no upper age limit for making contributions to a registered pension scheme in the UK, but the age at which you can receive tax relief on those contributions is capped at 75.

But it would be normal to consider the state pension age when it should be in drawdown?

They have to have an age to work, with so state retirement age is probably the best one.
In fact they work on it being an annuity rather than drawdown, as again easier to fix a figure.

dunstonh

NanaBee123 said:

A friend has a SIPP; he is 72 and lives alone in a Housing Association flat; he was receiving Housing Benefit from his local council but they have now decided his SIPP is savings and withdrawn his Housing Benefit and want him to repay £10k in past HB received! He can’t afford his rent and has now gotten into arrears and is at risk of eviction! Can anybody help??

Did he fail to disclose the pension when applying for the benefits?

If they have now found out about it and he didn't disclose it, then you would expect them to claim back the benefits he should never have been paid.

QrizB

NanaBee123 said:

A friend has a SIPP; he is 72 and lives alone in a Housing Association flat; he was receiving Housing Benefit from his local council but they have now decided his SIPP is savings and withdrawn his Housing Benefit and want him to repay £10k in past HB received! He can’t afford his rent and has now gotten into arrears and is at risk of eviction! Can anybody help??

He can help himself by drawing £10k from his SIPP to repay the HB overpayment, then continue to draw and income from the SIPP to pay his ongoing rent.