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Benefits & Pension lump sum

Jacobia1
Jacobia1 Posts: 4 Newbie
Fourth Anniversary First Post
in Benefits & tax credits

hi

I’m after some advice please?

I am looking to finish work in the next couple of months due to my disability (MS for last 16 years).
My question is, can I take a tax free lump sum from my pension now as I’ve just turned 55 to pay off a loan I have plus some utility bills without it causing a problem with my application for ESA or UC?


thanks in advance.

Comments

  • Largs
    Largs Posts: 501 Forumite
    100 Posts Second Anniversary Name Dropper
    edited 12 March at 9:37PM

    Have you made a claim for ESA or UC?

  • Spoonie_Turtle
    Spoonie_Turtle Posts: 11,005 Forumite
    10,000 Posts Sixth Anniversary Name Dropper

    Paying off debt (providing they're official debts - loans from e.g. friends and family would need some sort of recorded proof that it is a loan not a gift) and bills will not cause problems for UC.

    ESA is unaffected by capital.

    [Just to make sure you're aware, if you were to start taking monthly payments of a pension, the full amount would be deducted from UC, and payments of over £85/week would affect ESA too.]

  • Jacobia1
    Jacobia1 Posts: 4 Newbie
    Fourth Anniversary First Post

    hi

    I’ve not made any claim yet.


    thanks

  • Brie
    Brie Posts: 16,722 Ambassador
    Part of the Furniture 10,000 Posts Photogenic Name Dropper

    Before you do anything you need to consider what type of pension it is. If it's a work pension is it a defined benefit or defined contribution? If it's the first then normally the only way to get the TFLS is to put the pension in to payment which will have a big effect on your ongoing pension payments as well as your UC/ESA or any other income related benefits. If it's the second or it's a private pension then you could take a portion out but UC may then assume you will be wanting to access the rest instead of claiming benefits.

    Either way - will you have enough of a pension to support you later on? I realise that MS has a major impact on one's life but you do want to be able to enjoy what you are able to do and money can sometimes ease the way with that.

    If you need help dealing with the debts per se you might want to post on the debtfree wannabe board and if you need help with pensions you might want to post on the pension board. As a debt type person myself I wonder if you have notified your creditors about your situation and whether they may be sympathetic and be willing to be lenient with you as a result.

    I’m a Forum Ambassador and I support the Forum Team on Debt Free Wannabe, Old Style Money Saving and Pensions boards.  If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.

    Click on this link for a Statement of Accounts that can be posted on the DebtFree Wannabe board:  https://lemonfool.co.uk/financecalculators/soa.php

    Check your state pension on: Check your State Pension forecast - GOV.UK

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  • born_again
    born_again Posts: 23,665 Forumite
    10,000 Posts Sixth Anniversary Name Dropper
    https://forums.moneysavingexpert.com/discussion/6659385/benefits-pension-lump-sum

    Have you applied for PIP?

    Life in the slow lane
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