New style ESA and second pension

dadhelper
Online Community Member Posts: 6 Listener
Evening all,
My Dad has finally been approved to retire early under ill health following his diagnosis of multiple myeloma 2 years ago (what a saga that has been with his employer!). He’s been claiming New style ESA support group since his SSP has run out. And Pip. He had a small pension pot from previous employment which he took recently and advised ESA and pip of this and everything stayed the same.
My Dad has finally been approved to retire early under ill health following his diagnosis of multiple myeloma 2 years ago (what a saga that has been with his employer!). He’s been claiming New style ESA support group since his SSP has run out. And Pip. He had a small pension pot from previous employment which he took recently and advised ESA and pip of this and everything stayed the same.
We are now at a point where he needs to decide how to take this early retirement occupational pension as a lump sum or as monthly payments.
I’ve found info on how this would work for ESA if it’s a monthly payment but if it is a lump sum I can’t really work it out.
Can anyone guide me please?
Thank you so much. It’s been a long long two years and goodness knows what’s ahead of us to come as there is no cure for myeloma.
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Comments
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PIP is not affected because it’s not means tested.Lump sums are classed as capital and will not affect his ESA because it’s not means tested either.A weekly/monthly income from a pension is ignored for anything up to £85/week. There’s a 50p/week deduction in the ESA for every £1 over that amount.0
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If he takes a large lump payment he took into consideration how much he may have to pay.0
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poppy123456 said:PIP is not affected because it’s not means tested.Lump sums are classed as capital and will not affect his ESA because it’s not means tested either.A weekly/monthly income from a pension is ignored for anything up to £85/week. There’s a 50p/week deduction in the ESA for every £1 over that amount.
thank you for your reply.I may be missing something obvious (quite likely!) but if he takes the lump sum and then effectively lives off that month to month, I can’t understand why that wouldn’t affect ESA?Many thanks0 -
dadhelper said:poppy123456 said:PIP is not affected because it’s not means tested.Lump sums are classed as capital and will not affect his ESA because it’s not means tested either.A weekly/monthly income from a pension is ignored for anything up to £85/week. There’s a 50p/week deduction in the ESA for every £1 over that amount.
thank you for your reply.I may be missing something obvious (quite likely!) but if he takes the lump sum and then effectively lives off that month to month, I can’t understand why that wouldn’t affect ESA?Many thanks
A lump sum is capital not income. It would be income if he took a weekly/monthly drawdown.
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dadhelper said:calcotti said:If he takes a large lump payment he took into consideration how much he may have to pay.
sorry I don’t understand your reply?
many thanks
If he takes a large lump payment he should also take into consideration how much tax he may have to pay.
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poppy123456 said:dadhelper said:poppy123456 said:PIP is not affected because it’s not means tested.Lump sums are classed as capital and will not affect his ESA because it’s not means tested either.A weekly/monthly income from a pension is ignored for anything up to £85/week. There’s a 50p/week deduction in the ESA for every £1 over that amount.
thank you for your reply.I may be missing something obvious (quite likely!) but if he takes the lump sum and then effectively lives off that month to month, I can’t understand why that wouldn’t affect ESA?Many thanks
A lump sum is capital not income. It would be income if he took a weekly/monthly drawdown.0 -
dadhelper said:poppy123456 said:dadhelper said:poppy123456 said:PIP is not affected because it’s not means tested.Lump sums are classed as capital and will not affect his ESA because it’s not means tested either.A weekly/monthly income from a pension is ignored for anything up to £85/week. There’s a 50p/week deduction in the ESA for every £1 over that amount.
thank you for your reply.I may be missing something obvious (quite likely!) but if he takes the lump sum and then effectively lives off that month to month, I can’t understand why that wouldn’t affect ESA?Many thanks
A lump sum is capital not income. It would be income if he took a weekly/monthly drawdown.
Yes, same rules apply. Please do bear in mind that if he takes regular lump sums they could start asking questions as to why he didn't take a weekly/monthly drawdown.
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poppy123456 said:dadhelper said:poppy123456 said:dadhelper said:poppy123456 said:PIP is not affected because it’s not means tested.Lump sums are classed as capital and will not affect his ESA because it’s not means tested either.A weekly/monthly income from a pension is ignored for anything up to £85/week. There’s a 50p/week deduction in the ESA for every £1 over that amount.
thank you for your reply.I may be missing something obvious (quite likely!) but if he takes the lump sum and then effectively lives off that month to month, I can’t understand why that wouldn’t affect ESA?Many thanks
A lump sum is capital not income. It would be income if he took a weekly/monthly drawdown.
Yes, same rules apply. Please do bear in mind that if he takes regular lump sums they could start asking questions as to why he didn't take a weekly/monthly drawdown.0 -
Do you feel like this will be the most helpful for him @dadhelper?1
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Sorry me again! He is looking to take this second pension in several lump sums but is wondering if the new style ESA contributes towards his annual taxable allowance?0
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Yes New style ESA is taxable income. Please also be aware that although lump sums are classed as capital, if he takes several small lump sums then DWP could say that it's classed as a weekly/monthly income and anything over £85/weekly will reduce his ESA by 50p/week for every £1 over that amount.
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