Will my dad's Royal Mail Pension Scheme death benefits affect my mum's ESA?

Sofia123

My dad passed away last April and left behind a Royal Mail pension. 

We were contacted by the Royal Mail pensions department recently about an unclaimed pension which my mum being surviving spouse, is eligible for, however they could not disclose the total amount unless we filled in the forms with the relevant information and signed off.

Today, she recieved a letter saying that, because she is beneficiary of her late husband, she is eligible for 
Balance of Pension - £2,729 
Payment of Death Benefit lump sum - £4,372 paid by Capita
Lifetime Allowance 

They said that my mum has the option to receive her annual pension per annum, or either a Trivial Commutation Lump Sum of £12,693 which is taxable. The latter appeals to her more as she could use some of it on helping pay off my late dad's secured loan on the house as we got threatened by the mortgage lender.

However, I want to be sure we take the right option as the letter mentions her pension inheritance will be taxable. She is currently claiming widow's allowance, long term income based ESA and enhance PIP at maximum rate.

Kind regards x

Hannah_Alumni

Hello @sofia123

I am so sorry no one has been able to answer your query. I just wanted to check in to see if you had found an answer?

calcotti

Income based ESA and PIP are not taxable. 

If the ESA includes any contribution based ESA that part is taxable.
Widows Parents Allowance ( if that is what you are referring to) is taxable.

The pension will affect the ESA. If capital goes over £16,000 income based ESA would end. Capital over £6,000 would reduce ESA. Any regular pension income would be deducted in full from any ongoing income based ESA.