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New style ESA and second pension

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dadhelper
dadhelper 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. 

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. 

Comments

  • poppy123456
    poppy123456 Community member Posts: 56,998 Disability Gamechanger
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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. 
    I would appreciate it if members wouldn't tag me please. I have all notifcations turned off and wouldn't want a member thinking i'm being rude by not replying.
    If i see a question that i know the answer to i will try my best to help.
  • calcotti
    calcotti Community member Posts: 10,010 Disability Gamechanger
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    If he takes a large lump payment he took into consideration how much he may have to pay.
    Information I post is for England unless otherwise stated. Rules may be different in other parts of UK.
  • dadhelper
    dadhelper Community member Posts: 6 Listener
    Options
    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. 
    Hi Poppy, 
    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 

  • dadhelper
    dadhelper Community member Posts: 6 Listener
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    calcotti said:
    If he takes a large lump payment he took into consideration how much he may have to pay.
    Hi Calcotti,

    sorry I don’t understand your reply?
    many thanks
  • poppy123456
    poppy123456 Community member Posts: 56,998 Disability Gamechanger
    Options
    dadhelper 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. 
    Hi Poppy, 
    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.
    I would appreciate it if members wouldn't tag me please. I have all notifcations turned off and wouldn't want a member thinking i'm being rude by not replying.
    If i see a question that i know the answer to i will try my best to help.
  • calcotti
    calcotti Community member Posts: 10,010 Disability Gamechanger
    Options
    dadhelper said:
    calcotti said:
    If he takes a large lump payment he took into consideration how much he may have to pay.
    Hi Calcotti,
    sorry I don’t understand your reply?
    many thanks
    Poor typing on my part. I can see why you did not understand the post!

    If he takes a large lump payment he should also take into consideration how much tax he may have to pay. 

    Information I post is for England unless otherwise stated. Rules may be different in other parts of UK.
  • dadhelper
    dadhelper Community member Posts: 6 Listener
    Options
    dadhelper 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. 
    Hi Poppy, 
    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.
    Thanks Poppy. Such a minefield. I take it this is the case even if it’s his second pension he’s taken? 
  • poppy123456
    poppy123456 Community member Posts: 56,998 Disability Gamechanger
    Options
    dadhelper said:
    dadhelper 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. 
    Hi Poppy, 
    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.
    Thanks Poppy. Such a minefield. I take it this is the case even if it’s his second pension he’s taken? 

    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.
    I would appreciate it if members wouldn't tag me please. I have all notifcations turned off and wouldn't want a member thinking i'm being rude by not replying.
    If i see a question that i know the answer to i will try my best to help.
  • dadhelper
    dadhelper Community member Posts: 6 Listener
    Options
    dadhelper said:
    dadhelper 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. 
    Hi Poppy, 
    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.
    Thanks Poppy. Such a minefield. I take it this is the case even if it’s his second pension he’s taken? 

    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.
    Thank you. That’s fair enough. I think he might just take the lump sum and put into savings to use as needed 
  • L_Volunteer
    L_Volunteer Community Volunteer Adviser, Scope Member Posts: 7,982 Disability Gamechanger
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    Do you feel like this will be the most helpful for him @dadhelper:)
    Community Volunteer Adviser with professional knowledge of education, special educational needs and disabilities and EHCP's. Pronouns: She/her. 

    Please note: if I use the online community outside of its hours of administration, I am doing so in a personal capacity only.
  • dadhelper
    dadhelper Community member Posts: 6 Listener
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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?
  • poppy123456
    poppy123456 Community member Posts: 56,998 Disability Gamechanger
    Options
    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.
    I would appreciate it if members wouldn't tag me please. I have all notifcations turned off and wouldn't want a member thinking i'm being rude by not replying.
    If i see a question that i know the answer to i will try my best to help.
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