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Pension Freedom (55+) Lump sum (ESA IR)

fluffycatfluffycat Member Posts: 215 Pioneering
Hello
After some advice, please.....
How frequent (or infrequent) can you can take a SECOND draw-down Pension Lump sum without affecting income related benefits?

I took some money (Pension Lump Sum Draw Down) which DWP said OK  as it was under £6k. (£3500 about 6 months ago) Purpose of Debt repayment and updating a few house-hold / Personal bits with cash, than credit.

Hypothetically If I took £2K (in near future) net,  would it be ok as both (joined together) under 6K. 

Replies

  • woodbinewoodbine Community Co-Production Group Posts: 4,437 Disability Gamechanger
    As long as the lump sum keeps your savings below £6k in that respect its not a problem, something tells me there could be a problem that having accessed you pension you have opened a can of worms, but I might be wrong in that and your best source of info might be "pension wise"
    "Putting a child into care, isn't caring for a child" (T.Rhattigan)
  • fluffycatfluffycat Member Posts: 215 Pioneering
    woodbine said:
    As long as the lump sum keeps your savings below £6k in that respect its not a problem, something tells me there could be a problem that having accessed you pension you have opened a can of worms, but I might be wrong in that and your best source of info might be "pension wise"
    Hi there,
    Thanks for your reply....
    My worry when they DONT treat 'Draw Down' as Capital. (when DWP deems it as regular income)

    Your right, I'm not wanting to stir the worms too much!! 
  • woodbinewoodbine Community Co-Production Group Posts: 4,437 Disability Gamechanger
    "Putting a child into care, isn't caring for a child" (T.Rhattigan)
  • wilkowilko Member Posts: 2,355 Disability Gamechanger
    be careful as the DWP have access to accounts when they feel the need to investigate a claimant.
  • calcotticalcotti Member Posts: 2,159 Pioneering

    Not sure Pensionwise are all that knowledgeable about benefits.

    The basic rule is that an 'ad hoc' withdrawal is treated as capital and therefore has no impact on benefit payable if capital remains below £6,000. Regular withdrawals fall to be treated as income and are deducted in full from I-ESA. There is no guidance, to the best of my knowledge, on when several withdrawals fall to be treated as regular.


    Information I post is for England unless otherwise stated. Rules may be different in other parts of UK.
  • calcotticalcotti Member Posts: 2,159 Pioneering
    https://www.gov.uk/government/publications/pension-freedoms-and-dwp-benefits/pension-freedoms-and-dwp-benefits
    If you or your partner do take money from your pension pot, it will be treated as either income or capital, depending on, for example, how regularly you withdraw it.


    Information I post is for England unless otherwise stated. Rules may be different in other parts of UK.
  • woodbinewoodbine Community Co-Production Group Posts: 4,437 Disability Gamechanger
    I found pension wise really helpful especially about withdrawing for a pensions and it's effects on benefits, something in the back of my mind tells me that once you start to access a pension before the age of 66 they can then treat it as if you are accessing the full amount. However I am not a pension expert and may well be wrong, I suggest pension wise as its a free service if you went to an IFA its not cheap.
    "Putting a child into care, isn't caring for a child" (T.Rhattigan)
  • calcotticalcotti Member Posts: 2,159 Pioneering
    edited March 10
    woodbine said:
    I found pension wise really helpful especially about withdrawing for a pensions and it's effects on benefits, something in the back of my mind tells me that once you start to access a pension before the age of 66 they can then treat it as if you are accessing the full amount. However I am not a pension expert and may well be wrong, I suggest pension wise as its a free service if you went to an IFA its not cheap.
    Glad you had a good experience of Pensionwise. I think I’d probably trust an IFA even less to understand pensions and benefits!

    Any money retained in the pension pot still falls to be disregarded until the claimant reaches pension age. 
    https://www.pensionwise.gov.uk/en/benefits
    Before you or your partner reach the qualifying age for Pension Credit any money you take out of your pot will be taken into account when you’re assessed for benefits.
    Information I post is for England unless otherwise stated. Rules may be different in other parts of UK.
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