Would taking a pension lump sum affect ESA payments?

Foofighter

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

poppy123456

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.

littleacorn

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

Foofighter

Hi Poppy123456
That advise is really helpful. Thank you so much !

poppy123456

littleacorn said:

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.

poppy123456

Foofighter said:

Hi Poppy123456
That advise is really helpful. Thank you so much !

You're welcome.

littleacorn

Thanks @poppy123456. My ESA is contribution based with no income related top up so good news for me. 

littleacorn

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.

leeCal

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?

littleacorn

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.

poppy123456

littleacorn said:

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.

poppy123456

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.

Lisatho11987777

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poppy123456

lisathomas50 said:

@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.

Lisatho11987777

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poppy123456

lisathomas50 said:

@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

Lisatho11987777

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poppy123456

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.

Lisatho11987777

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poppy123456

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.

Burtkatarack

Regarding New Style ESA and taking the 25% tax free lump sum. I live alone with no income. All I have is my ESA and £2000 in the one bank account. I am in the group and have paid my NI for 30 years. I assume I am on contributory. My 25% is over £16,000 by a couple of grand. Looking at answers here I can take the lump sum without affecting my payment in anyway. Question is I'm over the savings limit? Also do I still need to inform DWP of this lump sum if it's not affected, as the New ESA is not means tested?