Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

    • mum of joey
    • By mum of joey 8th Jul 18, 12:03 PM
    • 55Posts
    • 20Thanks
    mum of joey
    Effect of Pension on Benefits
    • #1
    • 8th Jul 18, 12:03 PM
    Effect of Pension on Benefits 8th Jul 18 at 12:03 PM
    In the Pensions forum I have been discussing a 'surprise' pension that has come my way. Briefly, I opted out of SERPS in the 1980s but to be honest, had no idea what it meant, other than I may have thought that my old age pension would be less when I retired.

    Very recently, (end of April) 2018 I unearthed a carrier bag full of what I thought was just 'junk' mail, which I had tidied away a few weeks before Christmas 2017. I forgot about this carrier bag until this April and was just going through it and came upon an Aviva envelope which I had thought was just selling me car insurance (I believe that I had car insurance with them many, many years ao).

    To cut a long story very short, it turns out that it was a pension pot, which had been taken out for me in 1989, because I had opted out of SERPS, and there was nearly 30,000 in it. When I contacted them, Aviva told me all this.

    Big surpris, especially as I have huge debts, both personal and from credit cards - shortlived, however, as I realised that my benefits over those 29 years might be affected by this. For at least 3 years, I have been on Housing, Council Tax benefits and also receive Guaranteed Pension Credit. I have mainly worked full time most of the time during my life but have had periods of unemployment, when I have needed help (though I don't believe I received Guaranteed Pension Credit until the last few years. I am 67, 68 in December.

    When I got the updated figures of this pension (remember, the figure I gave was from December 2017), I contacted the DWP. I had investigated online in some depth and really do believe that my housing benefit is NOT affected. Benefits and my old-age pension are all I have had coming in for those three years.

    The DWP still hadn't responded after 3 weeks (I wrote to them as it was all so incredibly complicated, and I am not good on the phone.) The chap that I spoke to said that the letter had arrived weeks before but nothing had been done about it yet. All he could do was to cancel my Guaranteed Pension Credit if I liked! I said 'No - I can't manage as it is on what I have.' The point was that I wanted to take my 25% tax free element of the pension (just over 7,000) and use that to pay off some recent debts, to repair my old car, and to have some in hand to start to repay the DWP if that was the case.
Page 1
    • mum of joey
    • By mum of joey 8th Jul 18, 12:34 PM
    • 55 Posts
    • 20 Thanks
    mum of joey
    • #2
    • 8th Jul 18, 12:34 PM
    • #2
    • 8th Jul 18, 12:34 PM
    Sorry, slip of the finger there, it posted it too quickly.

    Does anyone have knowledge of how the DWP would treat a case like this, please? From my investigations online, it seems that they can treat a pension pot as though it has been in an annuity all that time, or at least since I was able to take the pension out (the letter says between ages 55 and 75 - I am 67 now), therefore be treated as income that affects benefits. But if I had absolutely no knowledge of it at any time until now, can they still do that? (a PensionWise chap I had a session with said that they have probably sent the letter now (in my PREVIOUS married name which I haven't had since 2005 - ie 13 years) but to THIS address (I have been here for 6 years or so) because I had never taken it out between ages 55 and 67 (now) and they wanted to find out what to do about it. I have had over 14 house moves since the late 1980s and don't recall ever receiving any letters about a pension until this one (which nearly got chucked out as junk mail).

    I feel that I can't further any pension arrangements now until I have learned what the DWP will do - eg will they want to take any overpayments of Guaranteed Credit (or would the council take overpaid Council Tax also, if applicable) all back at once? In which case, I might have to draw down and pay over a huge chunk of my pension and then be struggling for the rest of my life if my benefits go right down from then on as I may have to buy an annuity with whatever's left. The tax penalty on taking a lot of my pension out (not just the tax-free 25%) will wipe out a great deal of it. The whole thing is terrifying me, though people keep telling me not to worry. But it's not happening to them and I DO worry! I am even having counselling for anxiety and depression, a large part of this being the terrible situation that this pension has caused.

    So what should have been an unexpected 'surprise' has turned into a poisoned chalice to me. I am in huge debt elsewhere, I have little income, and now it looks as though I will have to pay back a large benefits/Council Tax overpayment.

    Can anyone with precise knowledge of how the DWP works in this sort of circumstance give me some sort of hope, please, before I go completely mad, as I don't suppose I will hear from them for some time. Even when I get my 25% (or more) if necessary, it is going to take 8-12 weeks from when I apply, so Aviva say,

    By the way, my other (credit card) debts are being dealt with through StepChange Debt Charity, who are paying a sum on my behalf every month to those companies.

    Also, I have spoken to Financial Advisors, none of whom know what the situation would be with regard to Benefits, as only the DWP knows, so there is no point in me getting an FA to sort this out.
    • pmlindyloo
    • By pmlindyloo 8th Jul 18, 1:10 PM
    • 12,201 Posts
    • 14,045 Thanks
    • #3
    • 8th Jul 18, 1:10 PM
    • #3
    • 8th Jul 18, 1:10 PM
    First point is that you are allowed 10000 of capital (savings etc) when on Guarantee Pension Credit.

    Second point is that you can pay off debts and other necessities without falling foul of deprivation of capital.

    Read this:

    Scroll down to 84781

    Next point is that they could treat the pension pot as if it was an annuity but only form your Pension Credit age (I believe - hope someone can clarify)

    You will need to explain about your forgetting about this pension pot, your moving numerous times and, most importantly, if you had known about it you would have used it to clear off your huge debts at the time, repair your car etc etc

    The DWP has to prove that you intentionally deprived yourself of this money to get Guarantee Pension Credit.

    You may wish to visit CAB (take all of the paperwork - information about the pension, your benefit award letters, your bank statements, your debt information) and ask them what evidence you need to send to Pension Credit.

    I will be honest and say I have no idea what the decision maker will decide as regards overpayments but you should try and gather any evidence in preparation in case the decision goes the wrong way.
    • mum of joey
    • By mum of joey 8th Jul 18, 2:56 PM
    • 55 Posts
    • 20 Thanks
    mum of joey
    • #4
    • 8th Jul 18, 2:56 PM
    • #4
    • 8th Jul 18, 2:56 PM
    Hi pmlindyloo. Thank you for your very useful reply. Goodness, what a document! So glad that you narrowed it down for me!

    In my letter to the DWP over 3 weeks ago, I did throw everything in - ie that I knew nothing of it till now, that I had moved over 14 times, and how things may have been very different financially for me, had I known of this pension. I certainly wouldn't have been paying silly amounts of interest on credit cards in order to live. Of course, as the PensionWise chap pointed out, had I known of it before, it would not have built up and up to nearly 30,000 (at the moment it is 29,045) so I am guessing that had I known about it, the DWP could only have taken it into account from when I was 55 anyway (which is what my letter said I could take it from, though I gather that it was a lower limit years ago - age 50?) and I would have been obliged to take out an annuity then, but the income wouldn't have been as much as it might be now.

    Of course, as I said, it has not been relevant for a large portion of my life since 1989, as I didn't need benefits, as was working most of that time (though did have short periods of unemployment), but it's these last 3 years that are really worrying me. Prior to that, after I retired, I lived on the inheritance from my late mother's estate (shared with my brother) and I paid the debts I had then off. When the capital got down to 16,000, I could apply for Housing Benefit/Council Tax, but I can't remember from what date the Guaranteed Credit was I changed banks last year (on the advice of the StepChange Charity as my bank was a creditor also) and I can't access my old account.

    I have obviously not 'deprived myself' of the capital deliberately, but this phrase, 'Ignorance of the law is no defence' keeps going round in my head', though in my case, it's not ignorance of the law but ignorance of the actual thing (ie a pension). I presume the DWP won't expect me to have been psychic?

    I will wait to see if my prompting the DWP a few days ago will lead to them dealing with it soon (the chap said, 'I'm sure they'll get to it soon, but phone in a week if you haven't heard', which doesn't fill me with confidence, but may be a start), and I am getting 'quotations' for annuities from my provider and also others, so that there are not more delays once the DWP tells me what the situation is with them. It's a right old mess, and half of me wishes I had chucked it with the 'junk' mail that I thought it was, and NEVER known of it, but I daresay it would have come back to haunt me at some point in the future.

    If I get no joy in a week or so, I may well go to the CAB and then send a further letter to the DWP.

    Anyway, thank you once again.
    • Alice Holt
    • By Alice Holt 8th Jul 18, 7:54 PM
    • 2,812 Posts
    • 3,290 Thanks
    Alice Holt
    • #5
    • 8th Jul 18, 7:54 PM
    • #5
    • 8th Jul 18, 7:54 PM
    "the DWP could only have taken it into account from when I was 55 anyway (which is what my letter said I could take it from, though I gather that it was a lower limit years ago - age 50?) and I would have been obliged to take out an annuity then, but the income wouldn't have been as much as it might be now."

    The DWP will only go back to your Pension Credit age (not from age 50 or 55) as pmlindyloo suggested.
    This is the age at which you are expected to draw on available pensions.

    "If I get no joy in a week or so, I may well go to the CAB"

    I would suggest going to your local CAB sooner than later. All CAB's are very busy and you may have a wait, so you may want to get the initial contact done first, and then arrange an appointment when you get the DWP's response.
    Alice Holt Forest situated some 4 miles south of Farnham forms the most northerly gateway to the South Downs National Park.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

169Posts Today

1,583Users online

Martin's Twitter