Employment and Support Allowance (ESA)
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Pension lump sum

Hi,
Just wondering if anyone can help with a question on ESA and accessing pension funds.... or point me in the right direction.
I am receiving 'new style' ESA with Support Group enhancement.
If I decide to take a lump sum from a pension will this affect my ESA payments?
Thanks v much

Replies

  • poppy123456poppy123456 Member Posts: 22,218 Disability Gamechanger
    Hi,

    New style ESA is not means tested so any lump sums taken from your pension will not affect the amount of ESA you're entitled to. If you receive a weekly/monthly income from that pension then anything up to £85 per week is also ignored. Over £85 per week and there will be a reduction of 50p for your ESA for every £1 of pension over £85.

    If you're claiming any other means tested benefit like Universal Credit and Council tax reduction then any lump sum from your pension is classed as savngs.
    Community champion and proud winner of the 2019 empowering others award. This award was given for supporting disabled people and their families for the benefit advice i have given to members here on the community.
  • littleacornlittleacorn Member Posts: 136 Courageous
    Just wondering the same with old style ESA support group and taking a lump sum from a pension. I dont get any other benefits other than PIP
  • FoofighterFoofighter Member Posts: 5 Listener
    Hi Poppy123456
    That advise is really helpful. Thank you so much !
  • poppy123456poppy123456 Member Posts: 22,218 Disability Gamechanger
    Just wondering the same with old style ESA support group and taking a lump sum from a pension. I dont get any other benefits other than PIP

    That will depend whether your ESA is Contrutions based or part Income Related top up. Contributions based ESA is the same as New style ESA. If part of your ESA is Income Related then any pension will affect the amount you're entitled to if you have a weekly amount from pension. If you have a 1 off payment then it's classed as savings.
    Community champion and proud winner of the 2019 empowering others award. This award was given for supporting disabled people and their families for the benefit advice i have given to members here on the community.
  • poppy123456poppy123456 Member Posts: 22,218 Disability Gamechanger
    Hi Poppy123456
    That advise is really helpful. Thank you so much !

    You're welcome.
    Community champion and proud winner of the 2019 empowering others award. This award was given for supporting disabled people and their families for the benefit advice i have given to members here on the community.
  • littleacornlittleacorn Member Posts: 136 Courageous
    Thanks @poppy123456. My ESA is contribution based with no income related top up so good news for me. 
  • woodbinewoodbine Member Posts: 2,968 Disability Gamechanger
    Do remember that only the first 25% is tax free anything above that is taxed at your notional rate of income tax. I'm assuming that you are over 55? Have you got some free advice from penionwise via the CAB it can be done over the phone.
    my advice is given freely and is correct to the best of my knowledge.
  • littleacornlittleacorn Member Posts: 136 Courageous
    Yes have got advice and it will only be the 25%. Have thought aboit taking all as it is not a great amount but that decision is still to be made. Just wish I could look into the future and see what financial position I will be in when I reach state pension age.
  • woodbinewoodbine Member Posts: 2,968 Disability Gamechanger
    The level of SRP ATM if you have 35 years N.I cont would be £175.20 which currently increases by a min of 2.5% a year, you can get a SRP forecast on the .gov website, roughly if you have 11 years still before you reach 66 then the SRP will have increased by 30% (thats a rough calculation).
    If when you retire you have less than 35 years cont. then the SRP will be reduced.
    my advice is given freely and is correct to the best of my knowledge.
  • leeCalleeCal Member Posts: 3,014 Disability Gamechanger
    edited January 15
    If you were to buy a stamp every week in order to build up your srp which one would it be and how much would it cost per week does anyone know?
  • littleacornlittleacorn Member Posts: 136 Courageous
    It wasnt about my SRP forcast I was thinking about it was would I be living as  a couple or a single person on benefits I was thinking about possibly claiming ESA UC HB etc but als I dont have a cystal ball.
  • poppy123456poppy123456 Member Posts: 22,218 Disability Gamechanger
    It wasnt about my SRP forcast I was thinking about it was would I be living as  a couple or a single person on benefits I was thinking about possibly claiming ESA UC HB etc but als I dont have a cystal ball.

    At the moment you live with your husband who works. Claiming UC now will depend on both of your circumstances because you'll need to claim as a couple because it's means tested. Your ESA will never be part of UC because it's contributions based.

    You can of course use a benefits calculator to check entitlement to UC with your husband. Help with any rent in the future will be through UC and not through housing benefit, unless you're already claiming housing benefit.
    Community champion and proud winner of the 2019 empowering others award. This award was given for supporting disabled people and their families for the benefit advice i have given to members here on the community.
  • woodbinewoodbine Member Posts: 2,968 Disability Gamechanger
    leeCal said:
    If you were to buy a stamp every week in order to build up your srp which one would it be and how much would it cost per week does anyone know?
    https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions

    But remember some benefits also give you N.I credits towards your SRP and you only need 35 years of cont. for a full SRP (in most cases)
    my advice is given freely and is correct to the best of my knowledge.
  • poppy123456poppy123456 Member Posts: 22,218 Disability Gamechanger
    woodbine said:
    leeCal said:
    If you were to buy a stamp every week in order to build up your srp which one would it be and how much would it cost per week does anyone know?

    But remember some benefits also give you N.I credits towards your SRP and you only need 35 years of cont. for a full SRP (in most cases)

    Yes indeed. Universal Credit does, also ESA/JSA and Income Support. However, if you're claiming ESA with a partner and you're not the main claimant then you won't have your NI credits paid towards your state pension. Carers allowance also pays NI credits. Child benefit pays NI credits up until the child is 12 years old.
    Community champion and proud winner of the 2019 empowering others award. This award was given for supporting disabled people and their families for the benefit advice i have given to members here on the community.
  • woodbinewoodbine Member Posts: 2,968 Disability Gamechanger
    Forgot that you can also claim N.i credits for what's called "carers credit" details below;

    https://www.gov.uk/carers-credit
    my advice is given freely and is correct to the best of my knowledge.
  • lisathomas50lisathomas50 Member Posts: 3,118 Pioneering
    @poppy123456 I just wanted to say when I was on esa before I went on universal credit I had was asked for details of my lump sum payment frim my pension 

    I also had to prove what I had done with it and had to send my bankstatements in 

    Thats what happend me 
  • poppy123456poppy123456 Member Posts: 22,218 Disability Gamechanger
    @poppy123456 I just wanted to say when I was on esa before I went on universal credit I had was asked for details of my lump sum payment frim my pension 

    I also had to prove what I had done with it and had to send my bankstatements in 

    Thats what happend me 

    That sounds like you were claiming Income Related ESA, which is means tested. The thread is about New style ESA which isn't means tested, so savings and pensions of up to £85 per week are all disregarded for this type of ESA.
    Community champion and proud winner of the 2019 empowering others award. This award was given for supporting disabled people and their families for the benefit advice i have given to members here on the community.
  • lisathomas50lisathomas50 Member Posts: 3,118 Pioneering
    @poppy123456 was on new  style esa on the support group when that happend 
  • poppy123456poppy123456 Member Posts: 22,218 Disability Gamechanger
    edited January 16
    @poppy123456 was on new  style esa on the support group when that happend 

    Are you 100% sure of that? May i ask when this was because New style ESA isn't means tested, it's a contributions based only ESA. May i also ask the reason why you moved to UC when you were claiming New style ESA? Do you still claim this as well as UC?

    This link here confirms my advice is correct. This was copied from this link.

    Your (or your partner’s) savings will not affect how much New Style ESA you’re paid. If your partner works, it does not affect your claim.

    Most income is not taken into account (but a personal pension can affect the amount you may receive).

    https://www.gov.uk/guidance/new-style-employment-and-support-allowance



    Community champion and proud winner of the 2019 empowering others award. This award was given for supporting disabled people and their families for the benefit advice i have given to members here on the community.
  • lisathomas50lisathomas50 Member Posts: 3,118 Pioneering
    I was on new esa then I couldnt claim then when I could claim they put me on universal credit 
  • poppy123456poppy123456 Member Posts: 22,218 Disability Gamechanger
    Sorry but i'm confused by "you couldn't claim" you said you were in the Support Group. Did you start working so your ESA claim ended?

    The reason i ask is because not only is it not means tested, it's also not part of UC. If you were claiming ESA previously and then moved to UC, your ESA should have continued along side the UC but your ESA amount would have been deducted in full from any UC entitlement.
    Community champion and proud winner of the 2019 empowering others award. This award was given for supporting disabled people and their families for the benefit advice i have given to members here on the community.
  • lisathomas50lisathomas50 Member Posts: 3,118 Pioneering
    @poppy123456 when you claim new style esa its not means tested but it you have a lump sum payment you have to declare the amount which I did thsts why I couldn't claim new style esa anymore and had to claim universal credit 😉 

    If you stop contributing  and you draw your lump sum payment  then you cant stay on that benefit I laughed actually  becsuse I get more on universal credit than I did on esa only difference was I get my universal credit monthly and I was getting my esa every 2weeks so I was happy realy 

    With my universal credit and pip I get more than I did when I was working 
  • poppy123456poppy123456 Member Posts: 22,218 Disability Gamechanger
    Of course you tell them what pension you receive but you said you had to prove what you spent the money on, which can't be correct because it's not means tested.

    Sorry but now i'm even more confused. What do you mean by "if you stop contributing and you draw a lump sum then you can't stay on that benefit?" New style ESA pays class 1 NI credits.

    When in the support group for New style ESA it continues for as long as you remain in that group. I just find it odd that you stopped claiming a  Contributions based benefit because of a lump sum, yet you went onto claim UC, which is actually a means tested benefit so savings/capital affect the amount you're entitled to.

    Also an income from a pension would reduce UC entitlement £1 for £1. So if you had £25 per week from a pension then this amount would be deducted in full from any UC entitlement.
    Community champion and proud winner of the 2019 empowering others award. This award was given for supporting disabled people and their families for the benefit advice i have given to members here on the community.
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