Private pension and New style ESA query

Little_miss_dfw

my husband is on new style ESA and will not be able to work again.

As he’s 50 he is able to claim his private pension. The pension company has agreed and he just needs to chose how to take it

we were looking at the small pots rule as pension aprox 20,000. If he takes this in 3 ‘pots’ is this likely to affect his ESA?

All I can find is that for it to affect his ESA it needs to be considered a regular income but pension wise warned him that this will affect his ESA if he takes it like this.

Brie

how is he able to claim his pension at 50? I understood that 55 was the minimum.

In any case as I understand to take a lump sum of any sort out of his pension would be considered savings which would effect any income related benefits.

Also please realise that at most normally only 25% is non taxable so the rest would be taxed at his normal rate. Net result is that he's unlikely to get as much as he thinks.

huckster

Normally lump sumps do not affect New Style ESA. It is only regular pension amounts that do affect ESA.

If the pension is taken out in 3 amounts and is definitely not part of a regular pension payment process, then ESA should not be affected.

But may be wise to check with ESA rather than be later questioned about this. The pension payments will show on HMRC data feeds that ESA will be able to access.

Little_miss_dfw

Thank you.

he is able to claim his pension due to ill health.

He is, understandably, weary about contacting ESA. I will look and see if I can send them a message

Robbie64

Under the original form of ESA that was introduced by the Welfare Reform Act 2007, a pension payment that affects ESA is as follows:

In this section—
“pension payment” means—
(a) a periodical payment made in relation to a person under a personal pension scheme or, in connection with the coming to an end of an employment of his, under an occupational pension scheme or a public
service pension scheme

The above would rule out pension pots being included as I can't see that they are periodic payments. I'm assuming your husband would simply be withdrawing the £20,000 over three lump sums?

That said, the version of ESA that now exists - New-Style ESA - was introduced under the Welfare Reform Act 2012. i can't find a section which is worded the same as the above. However, much of the rules relating to NS-ESA are the same as the original Conts Based version of ESA that previously existed so I can only guess that the same rules exist re: what is a pension payment that would affect ESA.

peteuk

https://forums.moneysavingexpert.com/discussion/comment/81966347#Comment_81966347

Side note - the age is raising to 57 in April 2028, unless your pension has a protection clause.

As mentioned you can take a pension early due to ill health.

Robbie64

https://forums.moneysavingexpert.com/discussion/comment/81966720#Comment_81966720

I've located the equivalent part of the above for new-style ESA. It's in the Employment and Support Allowance Regulations 2013, Regulation 67.

Regulation 67 in full:

Deductions for pension payment and PPF payment

67.—(1) Where—

(a)a claimant is entitled to an employment and support allowance in respect of any period of a week or part of a week;

(b)there is—

(i)a pension payment;

(ii)a PPF periodic payment; or

(iii)both of the payments specified in paragraphs (i) and (ii),

payable to that person in respect of that period (or a period which forms part of that period or includes that period or part of it); and

(c)the amount of the payment, or payments when taken together, exceeds—

(i)if the period in question is a week, £85; or

(ii)if that period is not a week, such proportion of £85 as falls to be calculated in accordance with regulation 79(1) or (5) (calculation of weekly amount of income),

the amount of that allowance is to be reduced by an amount equal to 50% of the excess.

(2) For the purposes of regulations 67 to 72 “payment” means a payment or payments, as the case may be, referred to in paragraph (1)(b).

Like all DWP benefit legislation it's not exactly straightforward to read. However, as long as the payments of the pension pots aren't a payment which covers a period of time then it isn't a payment that will affect ESA.

Little_miss_dfw

https://forums.moneysavingexpert.com/discussion/comment/81967476#Comment_81967476

thank you