Use pension funds to pay off debts - will this affect benefits ?

Angelajoy1961 wrote: »

Hi all, I'm considering using some of my pension funds to clear my credit card debts but am concerned this might affect the benefits I receive if £10,000 appears in my bank account. If I can prove I've used it to pay off debts should I be okay ? TIA

It depends what benefits you recieve? It will affect means tested benefits so paying off debts would be deprivation of capital. More info is needed to help you further.

Pension Credit threshold is £10,000 (no upper limit)
ESA (IR), IS, JSA (IB), UC threshold is £6,000 - £16,000
ESA (C), JSA (C) ESA (CNC), have no savings threshold.

If you are on one of the above with a threshold, the DWP will have to consider whether you did this deliberately to get more benefit or remain at the same rate of benefit. Anyone who tells you that "paying this or that or buying this or that" will be seen as deprivation of capital is wrong. It is a decision made by a Decision Maker (DM) The DM will want a letter from you to say what you did with the money and why...they might phone you.

Even if the money is in your account for half a day you will have to tell the DWP about it and where it went.


In short, you cannot find out on a forum what is allowed or not allowed because there are no set rules, except the rule that *if you do it with the intent of receiving the same amount of benefit or more benefit - then you will be treated as having deprived yourself of the money - and the DWP will treat you as though you still have that money (even though you don't have it).

There is another general exception that is generally allowed, is if you use the money to buy yourself a house to live in.

You can't ask the DWP either, because the very fact that you called and asked them..."is it ok if I pay this or that?" (they won't give you an answer by the way) will tell them that when you did decide to pay it, you were doing it for benefit purposes and it will be disallowed,