Moving from living off private pension to state pension

Spoonie_Turtle

Eligibility for ESA payments will depend on how long ago you stopped work, just so you know.

Also pension age Housing Benefit you can have savings up to £10,000 before it starts being affected (with £16k upper limit, except for those who also qualify for Pension Credit Guarantee Credit then there is no hard upper limit).

Vitor

If your health problems are long-term and affect your daily living or mobility, it might be worth looking at Personal Independence Payment (PIP). It isn’t means-tested, so your pension income or savings don’t affect it.

PIP is based on how your condition affects you day to day, not on your ability to work. If you qualified, it could give you extra income and in some cases increase your Housing Benefit or other support.

Might be a better route to explore than trying to reduce pension withdrawals, which councils can treat as “deprivation of income” and ignore for Housing Benefit purposes.

Northern_Wanderer

Blancmang25 said:

I am presuming you would get contribution based ESA, so your lump sum taken from your pension would not affect this as it is capital/savings.(income related would take savings/capital held)

No new claims for income related ESA are possible, it is a legacy benefit which has been replaced by UC. Only New Style ESA (which is based on NI contributiuons) is open for new claims. 

kaMelo

mad_mike said:

Blancmang25 said:

mad_mike said:

I have long-term health issues and have effectively retired early (63). I fortunately have a private pension which I am using to pay my rent and bills (I am not a homeowner). When I am 67 I can claim my state pension. Hypothetically, could I stop/reduce withdrawing funds from my private pension and instead claim Housing Benefit? I know their are rules about deprivation of capital etc but if my total 'savings' are under £5k (as they usually are) would I be doing anything wrong/illegal? 

I am presuming from your post you are taking lump sums from your pension and using this to live on?
Hb regs are very complex.
You can have savings from £6000 - £16000 but a tariff income will be taken from anything over £6000(£1per week, per £250 or part of if memory serves me correct).
If you do not take your private pension when you become entitled to take it(monthly) then hb can take this into account as income, as you are basically depriving yourself of the income.
You will need to declare the private pension when/if you make a claim for hb, regardless of whether you take it or not.
As you have long term health conditions can you not claim New Style Employment Support Allowance?

So my only option is to continue as I am until the pension is spent, so to speak. Then at state pension age, when I'm in a position of having no pension income or very little pension savings (under £6000) I may qualify for help with housing costs?

I'm not complaining, quite happy to follow the rules. Just looking for advice.

Thanks

If you're worried about your pension pot running out another option would be to purchase an annuity, giving a guaranteed income for life.

Shadyocuk

Unless I am missing something , if your pension is a DC pot rather than a DB then the amount in the pot should be disregarded by universal credit until you reach state pension age, so you should be able to claim Universal credit including the housing element instead of drawing down from the pot.
Deprivation of capital should only be relevant if you had a DB pension , had already reached the normal pension age for that scheme and had chosen to defer receiving payment.

Your health condition might put you in the LCW or LCWRA groups ( if not you would need to be actively looking for work) and or might make you for eligible PIP, (PIP is not means tested).

Hypothetically you could also spend money on say a 0% purchases credit card and then draw down a lump sum in say jan/feb and as long as the drawdown money was used to pay off the debt in the same assessment period it should not be counted as capital or deprivation of capital. How that would be treated in practice I dont know , but I would imagine that a few K would be ok , as to whether you could do that annually upto 67 again I dont know how they would treat that. 

Taylor2000

@Shadyocuk said "Deprivation of capital should only be relevant if you had a DB pension , had already reached the normal pension age for that scheme and had chosen to defer receiving payment."

I was just wondering where you had received this information from?

Shadyocuk

Taylor2000 said:

@Shadyocuk said "Deprivation of capital should only be relevant if you had a DB pension , had already reached the normal pension age for that scheme and had chosen to defer receiving payment."

I was just wondering where you had received this information from?

Taylor2000 that seems to have been the outcome from a couple of previous threads in this forum (pointing to discussions on Rightsnet). I should have said "deprivation/deemed" income rather than capital.

My understanding is that if someone had a DB pension and the normal pension age for that scheme was 60 and 
the same person was 63 but chose not to take the DB , then for universal credit purposes they would have a deemed income equivalent to the amount the DB would pay , which would be deducted pound for pound from any universal credit claim. If the normal pension age for the scheme was 65 , then they could claim universal credit without deductions upto 65 (subject to meeting all other conditions for UC ie capital etc).

Given shall we say the less than stellar training/knowledge of some in the DWP I am not sure how they would treat someone stopping withdrawing from their DC pots and then claiming UC, but I cant see how that would be any different to someone already claiming UC, reaching 55 (rising to 57) and leaving their DC pots alone and continuing claiming UC. 

If someones only pension/s are DC pots then they are not required to withdraw from them prior to reaching state pension age , and any funds in the pots do not count as capital until the person reaches state pension age.

I will turn that round and ask if anyone can point to anything that shows that someone under state pension age but over 55 (rising to 57) (or has a lower protected age)  has to stop or cant start claiming universal credit and instead has been forced to draw down from their DC pension pot/s?

Given the OP rents, then the standard monthly amount (their health conditions might entitle them to more) plus rental element, plus council tax benefit would be worth claiming , leaving their DC pots to support them after 67 or taking small adhoc lump sums to help support them to 67. There have been various threads on this forum where people have withdrawn small lump sums <6000 and not had any problems. This is obviously on the assumption that the OP's pension/s are DC and not DB. 

In my view how to treat people accesing DC pots does not seem to have been properly considered when the legislation was passed and that eventually either new legislation will be passed or there will be case law that makes things clearer.

kaMelo

Shadyocuk said:

Taylor2000 said:

@Shadyocuk said "Deprivation of capital should only be relevant if you had a DB pension , had already reached the normal pension age for that scheme and had chosen to defer receiving payment."

I was just wondering where you had received this information from?

Taylor2000 that seems to have been the outcome from a couple of previous threads in this forum (pointing to discussions on Rightsnet). I should have said "deprivation/deemed" income rather than capital.

My understanding is that if someone had a DB pension and the normal pension age for that scheme was 60 and 
the same person was 63 but chose not to take the DB , then for universal credit purposes they would have a deemed income equivalent to the amount the DB would pay , which would be deducted pound for pound from any universal credit claim. If the normal pension age for the scheme was 65 , then they could claim universal credit without deductions upto 65 (subject to meeting all other conditions for UC ie capital etc).

Given shall we say the less than stellar training/knowledge of some in the DWP I am not sure how they would treat someone stopping withdrawing from their DC pots and then claiming UC, but I cant see how that would be any different to someone already claiming UC, reaching 55 (rising to 57) and leaving their DC pots alone and continuing claiming UC. 

If someones only pension/s are DC pots then they are not required to withdraw from them prior to reaching state pension age , and any funds in the pots do not count as capital until the person reaches state pension age.

I will turn that round and ask if anyone can point to anything that shows that someone under state pension age but over 55 (rising to 57) (or has a lower protected age)  has to stop or cant start claiming universal credit and instead has been forced to draw down from their DC pension pot/s?

Given the OP rents, then the standard monthly amount (their health conditions might entitle them to more) plus rental element, plus council tax benefit would be worth claiming , leaving their DC pots to support them after 67 or taking small adhoc lump sums to help support them to 67. There have been various threads on this forum where people have withdrawn small lump sums <6000 and not had any problems. This is obviously on the assumption that the OP's pension/s are DC and not DB. 

In my view how to treat people accesing DC pots does not seem to have been properly considered when the legislation was passed and that eventually either new legislation will be passed or there will be case law that makes things clearer.

Nothing like that exists as under the legislation any money in a DC pension pot is disregarded until SPCA.
The only time a DC pension pot would have any affect on a UC claimant under SPCA is if they chose to draw money from it, what effect (if any) this may have on UC depends entirely upon the method used. If someone was drawing down from their pension pot and chose to stop, UC cannot force someone to restart drawdown.

Whether a deferred DB pension would have any affect depends upon the rules of the scheme about deferred pensions. If the pension has an uplift because of deferral (because it is paying out for a shorter period of time) then it will have no impact on a means tested benefit claim.
If however the DB pension has no uplift because of deferment, instead it pays a lump sum to cover the period of time between the schemes NPA  and the date of claim then this would probably have an impact upon any means tested benefits claimed within that period of time.

Taylor2000

@Shadyocuk. Thank you for your reply. 

You may be interested to see the following rightsnet post https://www.rightsnet.org.uk/forums/viewthread/20734/ and related newspaper article https://www.thisismoney.co.uk/money/pensions/article-14114353/Taking-NHS-pension-Universal-Credit.html 

Any unclaimed pensions whether DC or DB for people under State Pension age do not generate notional income for UC/ESA, only once people actually reach SPA. People under SPA do not have to apply for any type of pensions and it will not be classed as deprivation of income.