Will taking a lump sum pension affect our ESA support?

dancer50

On esa surport  and pip ,I claim for my huband  , who now is taking  lump sum pension,  will this affect  our esa surport 

poppy123456

If your ESA includes money for your husband then at least part of it will be Income Related. Taking a lump sum from his pension will be classed as savings. If this amount brings your total savings to more than £6,000 then it will affect your ESA. There will be a deduction of £1/week for every £250 or part there of over that amount.

For savings of more than £16,000 then entitlement to all means tested benefits will end.

If your husband takes a weekly/monthly drawdown then this will reduce your ESA £1 for £1.

If you're claiming housing benefit this will also be affected. For council tax reduction, all local Authorities have their own savings limit so you will need to check what their's is.

Sue_Alumni

Good morning @dancer50 and welcome to the online community 
Your husbands pension pot is disregarded as capital whilst he is under state retirement age. Any regular withdrawals from the pension pot will count in full as income.  Lump sum withdrawals  will count as capital and will be taken into account in the way poppy has explained. If you spend your capital in order to retain your benefit by keeping it below the capital limit  you may still be treated as having that capital. You would need to show that any expenditure was not made with the intention of retaining benefit but that you would have spent the money in the way you did regardless of the effect on your benefit entitlement. 

dancer50

So if my husband  takes his pension,  and I am on no means benefit s and pip we can't have more than 16000 , anything after that we lose benefits and housing  benefits?????

calcotti

dancer50 said:

So if my husband  takes his pension,  and I am on no means benefit s and pip we can't have more than 16000 , anything after that we lose benefits and housing  benefits?????

As advised PIP and contribution based ESA are not affected. Means tested benefits will all start to reduce of capital goes over £6000 and will stop if go over £16000.

Any pension income will also reduce entitlement.

poppy123456

dancer50 said:

So if my husband  takes his pension,  and I am on no means benefit s and pip we can't have more than 16000 , anything after that we lose benefits and housing  benefits?????

If your ESA is more than £117.60/week then at least part of it will be Income Related (means tested). If you're claiming housing benefit this is also a means tested benefits.

dancer50

And do I have to inform  esa or will they be informed  by dwp for work and pensions???

calcotti

Would need to inform ESA. The pension arrangements have nothing to do with DWP, the pension administrator would be dealing with HMRC.

glo45

I so confused  , we have withdraw 15 thousand  pounds , we have paid of bills because of interest  rates on them , which come to about 6 thousand  , spent 1 thousand  in home improvement  as i am disabled first 7 thousand  was tax free second 8 thousand  is taxable  which leaves us with about 8 thousand  , but my huband  is 55 and has now a draw down pension of 20 thousand  , does the draw down pension be class as savings....head wreaked .....

poppy123456

glo45 said:

I so confused  , we have withdraw 15 thousand  pounds , we have paid of bills because of interest  rates on them , which come to about 6 thousand  , spent 1 thousand  in home improvement  as i am disabled first 7 thousand  was tax free second 8 thousand  is taxable  which leaves us with about 8 thousand  , but my huband  is 55 and has now a draw down pension of 20 thousand  , does the draw down pension be class as savings....head wreaked .....

You've posted on someone else's thread, which is confusing because i started to read the thread again before i realised you are a different person. Your thread is here. https://forum.scope.org.uk/discussion/96020/hi-my-name-is-glo45-my-husband-wants-to-withdraw-25-of-his-pension-will-i-lose-esa#latest

As i advised on your other thread if part of the ESA is Income Related then the lump sum will be classed as savings and will affect your ESA. For every £250 or part there of over £6,000 there's a £1/week deduction. If the lump sum took your savings over £16,000 then your ESA would end.

Have you rang ESA to ask what your claim is made up of? If not then you will need to do that, if part of it is Income Related then you will need to report the lump sum.

If any part of his ESA is contributions based this is not affected by savings/capital.

If he draws down a weekly/monthly amount then this will reduce any Income Related ESA £1 for £1.

If part of it is contributions based (£117.60/week) then pensions of up to £85/week are ignored (you must still tell them) for every £1 over this amount the ESA is reduced by 50p/week.

If you're claiming council tax reduction you must also report the savings to your local Authority. Some LA's have a maximum savings limit of £6,000, which would mean you will no longer be entitled to any CTR.

glo45

Ours is contributing esa , and first lump sum was taxed  on 7,500 second  was tax free 7.600

glo45

He is not,taking a pension  the rest 20,000 is in a draw down incase of emergency,