ESA AND occupational pension

fluffycat

hello…..

Whilst on legacy ESA IR (support group) & EDP (underlying ESA CB as moved from IB)

How does ESA treat ‘occupational pension’ monthly payments?
(effect on HB, CTB & Health Costs too ? (though Prescriptions / Eye-Tests free @ 60)

Do they deduct pension (from ESA) when received in the bank (monthly in arrears) or when commences?

I’ll have to be mindful of the £6k capital limit so hopefully can balance lump vs pension.

(Once ESA COC administered, UC won’t be far away, so not sure how complicates it when given 3 months notice)

poppy123456

Pension weekly/monthly income is treated as income for income Related ESA and will reduce it £1 for £1.

Single person EDP is currently £20.85/week so if your pension is more than this then your IR top up will stop.

That will mean you would not automatically qualify for free NHS treatment.

It may also affect HB but you would need to use a benefits calculator for that. Can’t advise about CTR though sorry because all alas have their own rules.

Same rules apply to Univeral Credit when you claim this and it’s deducted in full.

For CB ESA pensions of up to £85/week are ignored. For every £1/week over that amount your ESA will reduce by 50p/week.

Lump sum pension withdrawals are treated as capital. If your total capital is less than £6,000 then it will be ignored.

Yes, you need to report any pension withdrawals, whether it’s an income or lump sum.

fluffycat

Thanks for replying

will ESA revert back to ESA CB (with £85 rule) if the EDP is wiped out?

If so, would I have to claim HC1 low income? (Like from IB days) Inform HB/CTR of change ?

Kimmy87

Yes that's all correct 😊

poppy123456

You may also want to take sometime to think about the pension income because if it’s not much more than £20/week it wouldn’t be financially worth taking it due to the deduction in your ESA.

One other thing to think about, if your ESA doesn’t include the Severe Disability Premium then UC that includes the LCWRA element pays more than ESA Support Group.

fluffycat

thanks for replies

There’s NO SDP in payment.

Wont ESA (notionally) treat pension as received whether claimed or not?

I’m not sure the values until illustration / options received. Perhaps 4 to 5 times EDP rate.

poppy123456

No they will not because you are under state pension age. This rule only applies when you're state pension age and above.

If you claimed UC you would be about £120/month better off. Your CB based ESA would continue as normal and would revert to New Style ESA. This would be deducted in full from any UC entitlement.

Do also be aware that because you're also claiming housing benefit, this will soon be ending for working age people and you will be invited to apply for UC anyway. Unless you're either living in supported or temporary housing and then rent would continue to be paid through housing benefit.

Your pension would be deducted in full from UC, which could mean financially you could end up being even more worse off due to the fact that UC would include help with your rent. The deductions for your pension would reduce the whole of your UC, not just part of it.

It maybe worth contacting Pension wise. See link.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

fluffycat

thanks for replies

I really need the lump sum to keep me going for a while as there’s no scope for one off expenditure or necessary (life preserving) ongoing expenses, from regular benefits.

Is there legacy ESA Change or circumstances now or legacy ESA to UC calculators ( managed migration when occurs)

Kimmy87

If you put your circumstances into a benefits calculator, it will offer to look at your UC entitlement

https://www.gov.uk/benefits-calculators

poppy123456

https://forum.scope.org.uk/discussion/comment/962069#Comment_962069

Lump sums are not treated as income, as I advised above. They are treated as capital (savings) if you withdraw a lump sum and this doesn't take your total capital to more than £6,000 it is disregarded so all your means tested benefits continue as normal.

It is only a weekly/monthly income from a pension that's treated as income.

fluffycat

Thanks for replies

Can only confirm (Benefit Calc)

ESA current rate (no pension)

UC (no pension) +£27 more PW overall (as Poppy suggested above)

Can't find a way to see how Legacy ESA is affected now and within UC without amended ESA claim.

poppy123456

You said ..Can't find a way to see how Legacy ESA is affected now and within UC without amended ESA claim. I'm not sure what you mean by that.

If you claimed UC then any Income Related ESA would continue for 2 weeks and then stop. You will be entitled to the LCWRA element of UC from the start of your claim, as I advised above.

CB ESA would continue as normal and you will receive £276.40/fortnight. This will be deducted in full from any UC entitlement at a rate of £598.86/month. The deduction seems more than you receive but it's correct. ESA is a weekly benefit and UC is monthly and there's 4.3 weeks in a month, not 4 weeks.

Basically, it's a dual claim and UC would top up your income.

If you received a monthly income from your pension then your UC would reduce £1 for £1.

fluffycat

Thanks for replies

If EDP is stopped and claim is treated as ESA CB (with £85 pension disregard) I will have excess income for HB / CTB purposes (65% 20% rule) so will be worse off weekly after paying more towards them!

poppy123456

This is why having a pension income isn't always financially a good idea.

fluffycat

Thanks for replies

hello

When does ESA take pension income into account? I.e. from due date or when paid? (Pension monthly in arrears)

If they reduce ESA from due date I will have to survive on less income and owe rent & ctax money for a month or longer, if pension is delayed.

Also, pension will be less unless HMRC give proper tax code, than week 1.

poppy123456

I'm unsure on the answer to that one, sorry. Did you ring Pension Wise as I advised in an earlier comment?

I'm quite surprised you're going ahead with the Pension Income after what I advised here.

fluffycat

hello

thanks for replies

Pension Wise won’t give financial advice.
I’ve used them before with private pension freedoms; as they advise on how pensions work.

it’s what’s the biggest angst, kerfuffle of incoming Pension income (but lump sum to smooth things out) or limping along with how things are now. (No surplus to ease budget)

The angst would be saved until Pension Credit age!

poppy123456

Lump sums are not treated as income, they will be capital (savings) however, if you take regular lump sums they could treat them as income, rather than capital. It depends on how often you withdraw that lump sum and only a decision maker from DWP can make that decision.

You still need to report any lump sums, even if your capital is less than £6,000 after taking the lump sum.

fluffycat

thanks

(can’t access lump sum unless claim pension which am hesitate to)

Do you know if you intend (legally) to defer occupational pension (ESA/UC) to age 67 (SPA) BUT

make a claim let’s say aged 63, will they readjust your ESA / UC / HB back to 60?

poppy123456

I've never heard of the rule that you can't have a pension drawdown lump sum without also taking a weekly/monthly income. Are you sure this is correct?

SPA is currently 66 so any pension pot is ignored until you reach SPA.

If you have a weekly/monthly income from that pension then it will always be treated as "other income" and reduce Income Related ESA and UC £1 for £1. Even before you reach SPA.

fluffycat

hello

It’s a works pension with specific terms.
The only way I would draw a lump sum separately is to move it out BUT I would have adviser / regular fees etc. and it won’t necessarily increase at same rate as CPI

(I’d expect some schemes would differ to mine as you suggested, like with private pensions with drawdown option)

(You can only take your pension and lump sum at the same time. If you take them early then both are subject to actuarial reduction.)