Confusion about pension treated as savings

agnomen

I am on State pension, housing benefit and a small amount of pension credit. I have an income release pension pot of around 19k. I recently asked the DWP why I was not on guaranteed pension credit which my calculations indicated I should be getting.

I was told that, because my pension allows withdrawals it is treated as savings but if I had a fixed amount every month it would be treated as a pension. Clearly I was confused when deciding on an income release scheme. Guaranteed pension credit would help with dental treatment that I currently don't think I can afford.

Is it feasible to change my pension in some way that will allow me to qualify for guaranteed pension credit?

Exodi

You could use your pot to buy an annuity.

Obviously any decision like this you need to think long and hard about.

Silvertabby

You would need to get an annuity quote, then factor these figures into your calculations. Depending on your age, you could find that a monthly annuity may still tip you out of qualifying for guaranteed pension credit.

agnomen

Thanks for the advice. I can't remember why i didn't opt for an annuity originally, probably for flexibility (ironically). I was hoping to pass most of it on to my daughter but there's too much tax to pay.

Age mid 70's. How would that affect it?

HillStreetBlues

https://forums.moneysavingexpert.com/discussion/6664076/confusion-about-pension-treated-as-savings

Without figures it impossible to advise what's best. as even if you took is as income then that extra income might take you over the threshold.

Altior

Pension pots are savings, that can only be accessed after a certain age. There are varying methods of access, or they can be used to purchase a regular income, as has been highlighted. It defeats the entire purpose of saving for older age, to be aged 70's and still hold on to said savings if there's something pretty pressing to use some of them on. At least in my view.

xylophone

https://www.gov.uk/government/publications/pension-freedoms-and-dwp-benefits/pension-freedoms-and-dwp-benefits

Once you (or your partner) reach the qualifying age for Pension Credit, you are expected to use your pension or pensions to help support yourself.

If you choose not to buy an annuity after reaching the qualifying age for Pension Credit, an amount of ‘notional’ income will be taken into account when your benefit is worked out. ‘Notional’ income (in this case) is an amount equivalent to the income you would have received if you had bought an annuity.

If you take an income from your pension pot, the amount which will be taken into account when assessing your benefit will be the higher of the actual income or notional income. If you take a cash lump sum, this will be taken into account as capital.

It is your responsibility to tell DWP – and your local council where appropriate – if you or your partner take any money from your pension pot.

https://www.ageuk.org.uk/siteassets/documents/factsheets/fs48_pension_credit_fcs.PDF