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Lump Sum Pension Payment. Will I have to go onto Universal Credit?

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Bubbly1
Bubbly1 Community member Posts: 22 Listener
edited April 2022 in Benefits and financial support
I currently receive Housing Benefit, ESA (Support Group) and PIP. If I take a lump sum of £6000 and a small regular payment from an old DC work pension will it constitute a new claim and will I have to go onto Universal Credit? Any advice would be welcome as I cannot find any help online. Thank you 
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  • poppy123456
    poppy123456 Community member Posts: 55,135 Disability Gamechanger
    edited April 2022
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    For mean tested benefits the lump sum will be classed as savings. This means that if that lump sum takes your total savings to more than £6,000 there's a £1 deduction for every £250 or part there of.
    For the weekly/monthly payment then this will be classed as income and if your ESA is Income Related it will reduce it £1 for £1. If any part of the ESA is contributions based/New style ESA then pension of up to £85 per week is ignored. Anything over this and your pension will reduce by 50p for every £1 over that amount.
    If your ESA is Income Related then there's very little point in taking a weekly/monthly amount because of the £1 for £1 reduction.
    This will not prompt a move to UC.

    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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  • calcotti
    calcotti Community member Posts: 10,010 Disability Gamechanger
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    There is no benefit in drawing regular pension income while claiming working age means tested benefits for the reasons set out by poppy.
    Information I post is for England unless otherwise stated. Rules may be different in other parts of UK.
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  • Bubbly1
    Bubbly1 Community member Posts: 22 Listener
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    Thank you for your advice above. I have no savings, am aged 57 and really struggling financially. Can I take £6000 and no monthly payments if that’s possible and how many times can I do that please apart from the first tax free payment? 
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  • poppy123456
    poppy123456 Community member Posts: 55,135 Disability Gamechanger
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    The lump sum will not affect your means tested benefits. If you continue to take multiple lump sums over a short period of time DWP could ask questions. 
    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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  • Bubbly1
    Bubbly1 Community member Posts: 22 Listener
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    Thank you for all your help 
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  • woodbine
    woodbine Community member Posts: 11,802 Disability Gamechanger
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    The first 25% of a lump sum withdrawal will be tax free, there is nothing to stop you doing what is called "draw down". My advice would be to talk to pension wise who give excellent free advice on pensions and there effect on benefits.

    https://www.citizensadvice.org.uk/debt-and-money/pensions/get-ready-for-your-pension-wise-appointment/
    2024 The year of the general election...the time for change is coming 💡

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  • calcotti
    calcotti Community member Posts: 10,010 Disability Gamechanger
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    woodbine said:
    The first 25% of a lump sum withdrawal will be tax free, there is nothing to stop you doing what is called "draw down". 
    It depends on how you take it. It could be 100% tax free if the tax free part is taken up front. Agree with the advice to talk to PensionWise.
    Information I post is for England unless otherwise stated. Rules may be different in other parts of UK.
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  • Bubbly1
    Bubbly1 Community member Posts: 22 Listener
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    Thanks everyone 
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