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    • RATY
    • By RATY 10th Mar 18, 6:00 PM
    • 1Posts
    • 0Thanks
    No idea !
    • #1
    • 10th Mar 18, 6:00 PM
    No idea ! 10th Mar 18 at 6:00 PM
    Need some advice regarding my sister for whom I manage finances . She is currently on ESA (income based) , has a small work pension of 500 a year for which her ESA is reduced . She has a 16,000 mortgage and struggles to pay it . At the end of the year she is 60 and has been sent a letter from Scottish Widows asking her what she wants to do with her 2 pension pots which are worth 8000 and 39000 ,Her options are take 25% and an income (amount unknown atm) or take all in cash or use it as a savings pot with 25% withdrawals per year . Now I understand all her benefits will stop when she receives this money but I am not sure what is best for her . I'm thinking take the cash pay off the mortgage and live off the remainder until benefit is restored or state pension kicks in or take 25% and pay that off the mortgage and use the rest as an income . What advice can anyone give here ?
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    • Brynsam
    • By Brynsam 10th Mar 18, 7:14 PM
    • 919 Posts
    • 604 Thanks
    • #2
    • 10th Mar 18, 7:14 PM
    • #2
    • 10th Mar 18, 7:14 PM
    I think this is a benefits question rather than a pensions question, so you might be better off asking it on the benefits board.
    • xylophone
    • By xylophone 10th Mar 18, 8:18 PM
    • 25,371 Posts
    • 14,967 Thanks
    • #3
    • 10th Mar 18, 8:18 PM
    • #3
    • 10th Mar 18, 8:18 PM

    may be worth a look.

    However, it is unclear as to whether DWP would require her to have recourse to these pensions as she is under Pension Credit Age.

    If they do, on the basis that there was a pension age of 60 on these policies and she has now reached that age, then she will need to have regard to the effect that drawing the pensions will have on her benefits.

    She would also wish to have regard to tax - there is no point in drawing down money on which she will have to pay tax if she can avoid it.

    She might consider transferring both pensions to a SIPP, taking the 25% PCLS and sufficient income from the balance before 6/4/2019 to keep her within her personal allowance - this might well be enough to enable her to pay off the mortgage.

    Example id=EAIaIQobChMIrdTctsni2QIVyb3tCh3DEwKmEAAYASAAEgK dYPD_BwE

    She might then (in 2019/20) draw down her personal allowance from the pension on a monthly basis and do the same in the next couple of tax years until the pension is used up - this will bring her very close to her state pension age.

    She may be entitled to benefits again between using up the pension and drawing her state pension and possible even after that depending on her personal situation.

    She might be well advised to book an appointment with an expert benefits adviser at CAB and with Pension Wise concerning her pension options.
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