Mums ESA/DLA

[joeblogs]

Thank you GamerNic, yes that's what I was asking. I will wait for mum's to hopefully arrive. Many thanks for that information.

[antone]

Yes, these letters go out over a couple of months from January-March, so your mum should get hers some time in that period.

 

(They spread them out over that period because they prompt a lot of calls to the helplines - if the DWP sent them out over a week or so the lines would be swamped for weeks.)

[joeblogs]

This is a really old post which I would like some fresh advice on please.

 

So the 3rd pension mentioned in post one is due to be released summer 2018. All the figures remain about the same, the lump sum is £1,520 and that will be paid as a separate payment in the summer. This bit I understand.

 

My mum's circumstances are still the same as in post one. I called the 3rd pension up today - please note it is a Council pension. Now I am confused and need advice based on the figures mentioned in post one and the annual pension is about £510 per year.

 

Council pension guy said that if all 3 pensions were under £30,000 a figure set by HMRC, then my mum would have to take a compounded pension, which I think the guy means that the two other pensions would be placed in the same pension pot giving a total annual pension of £645.40. He said in these circumstances the pensions would be calculated on longevity, interest rates etc and paid as a 'one off' payment. He also said that my mum would not have an option to take 12 monthly payments of the pension - I expect they want to do a one off payment to cut the administration costs - however, this may well take her over the Income based ESA entitlement.

 

Based on the above, and the fact that I am confused and cannot find a calculator to calculate an approximate figure of how much the lump sum pension would be, can anyone else help me? BTW my mum is 62. I understand that they will deduct £1 for £1 from my mum's IB ESA, but would like an idea on how much the one off lump sum they would pay to clear the 3 pensions off given my mum's age.

 

Any help much appreciated as I am really confused.

[reallymadwoman]

First, I think the Council pension guy may not be right. I have a number of small pensions each paid by a different company and nobody has made me 'compound' them, though one is only paid annually because it's a very small amount. Could you speak to PensionWise perhaps? Did he perhaps suggest she withdraw the whole amount as a lump sum and forgo any pension? I know the pension rules have changed enormously and there may be other options, though I don't think they would affect pensions already in payment.

 

Second, it shouldn't make any difference whether the pension is paid annually, quarterly or monthly - if there is any reduction due to her ESA, it will be based on the equivalent weekly amount.

 

Third, any lump sum should be treated as capital not income.

 

I'm not a pension expert but I got a written quote from my providers which set out exactly how much my lump sum would be and how much the pension would be well in advance of when it was due to start, have you asked for a quote?

[honeybee13]

Hello there.

 

As well as Pensions Wise that RMW mentions, you could try the Pensions Advisory Service, TPAS who give good advice on the phone. Both give their advice for free.

 

https://www.pensionsadvisoryservice.org.uk/

 

HB

[honeybee13]

Update: I think Pensions Wise and TPAS are the same thing now. I knew there was going to be a merger. I hope you get the advice you need though.

 

HB

[joeblogs]

Thanks RMW and Honeybee for your valuable information. I did speak to Pension Advisory yesterday and they said the same as RMW that the Local Government Pension Scheme my mum has this small pension with, that she should NOT be made to take it as one lump sum and as she left that job in 1998 she should have been offered the pension under the 'guaranteed minimum pension rule' at 60 as opposed to this coming summer when she will be 62. They have advised I get back to the LGP department and query this. Pension Advisory said if the LGP insisted my mum would have to take the lump sum pay off they would help defend the case.

 

I called LGP and they are preparing a profile of this pension. They said the way their pension scheme is managed, it is this summer when my mum should receive the pension, despite me saying that under the guaranteed minimum pension rule she should have received it at 60. To be fair the lady was very helpful and she did say that pensions and all the different changes were very complex and her and her manager would be taking a close look. She also said the pension may fall under 'trivial comutation' (up to £30,000) hence the reason to pay my mum off in one go, although, I on my mum's behalf can request that she is paid monthly as the pension is index linked. She said it was the pensions management rules that all pensions that fall under trivial comutation are paid off in on lump sum.

 

This is very stressful as I don't really understand, I mean, can the LGP Management make their own rules about retirement age, guaranteed minimum pension states she should have took it at 60 - they are adament the answer is 'no' and that when the calculations are done she will be almost made to take this lump sum unless the Senior Pension Managers overturn the decision upon a written appeal.

 

Thanks for your help.

[honeybee13]

Fwiw, I agree with your take on this joe. I don't see how they can dictate to your mum. If TPAS say they'll back you, I think that's really important. It'll be good to have them on board and you never know, you might help other employees who are being made to take options they don't want.

 

HB

[joeblogs]

I now know that the lump sum pension my mother will receive after tax deduction will be around £10,750 which should be paid in June 2018. She is claiming Income Based ESA – I am her DWP Appointee. This amount will take her over the £6K threshold by about £4,750.

I have some questions if anyone can advise me please.

Universal Credit rolls out in our area in May this year. When I advise the DWP of this lump sum pension, will they try to make me claim Universal Credit for my mum?

My mum claims full Housing and Council Tax Benefit – will this be reduced in any way?

When the lump sum goes into my mum’s account it will pay off her overdraft, will the DWP class it as deprivation of capital or would the overdraft reduce the £4,750 approx figure over the threshold?

Can I use this money within reason, to purchase things which will make her life better? Can anyone advise of the items that would not be classed as deprivation?

Thanks for any advice.

[joeblogs]

Another quick question as I am useless at maths. I understand that my mum's IB ESA will reduce £1 for every £250 over the 6K threshold, so based on this, how much ever 2 weeks will be deducted of her ESA of £370.80 that she currently gets?

[joeblogs]

Please is there anyone who can answer my questions in posts 16 & 17 I would be very grateful.

 

Also another quick question about IB ESA and Universal Credits. UC rolls out in our area in May 2018 for new claims. My mums IB ESA is awarded until 2019 when I expect to receive her ESA50. As UC will be out in our area by then, when the ESA 50 arrives will they class it as a 'new' claim even though she is already receiving IB ESA?

 

Thanks in advance for any advice on these posts.

[honeybee13]

Hi Joe.

 

I'm sorry you're waiting for answers. Your questions are fairly complex, so not everyone on the forum will know the answers. Have you tried a benefit calculator like Entitledto to give you an idea?

 

As I said before, your mum may not have to take the tax-free cash from the pension if she doesn't want it. Most private and company schemes I've seen don't make you take cash out and you can just opt for the pension.

 

HB

[joeblogs]

Thanks for your response Honeybee. The pension is sorted, it's a Local Government Pension Scheme and they operate under the HMRC £30,000 threshold relating to trivial commutation - this I now understand and she will have to take the lump sum.

 

I have called both the ESA dept and Universal Credit dept and believe it or not, they could not answer any of my questions!! ESA even said my mum would lose her Housing and Council Tax.

 

This is why I've posted on the forum as I feel people on here have more knowledge than the people at the DWP.

[honeybee13]

Thanks for your response Honeybee. The pension is sorted, it's a Local Government Pension Scheme and they operate under the HMRC £30,000 threshold relating to trivial commutation - this I now understand and she will have to take the lump sum.

 

Apologies, I'd forgotten that. Did you get anywhere with TPAS about whether they can force her to commute the pension?

 

I'd still suggest running the scenario through a benefits checker, it could be useful.

 

HB

[joeblogs]

TPAS are looking into it, but they say it's likely the law has changed since the 1990's, anyway after thinking about it, it would work out around £40 per month and I am going to need to produce a P.60 every year as it's index linked, so the advice is take the lump sum.

 

I've also had a go on the calculator, but some of the questions are more specific and would be grateful for clarification from people on here who have the knowledge as obviously the calculator does not answer these questions although it was more useful than the DWP and UC.

 

So if anyone can offer advice on posts 16, 17 & 18 it would be much appreciated.

[honeybee13]

Can you give us an idea of which questions on the calculator you're having problems with please, joe?

 

HB

[joeblogs]

There is nothing wrong with the calculator but I have asked specific questions in posts 16, 17 & 18 that are not relevant to the calculator.

[antone]

Another quick question as I am useless at maths. I understand that my mum's IB ESA will reduce £1 for every £250 over the 6K threshold, so based on this, how much ever 2 weeks will be deducted of her ESA of £370.80 that she currently gets?

 

You said she will be over the £6000 threshold by £4750 or thereabouts. So we divide £4750 by 250 to get £19. This is the weekly amount that would be deducted, so per fortnight it would be £38 from her £370.80, leaving £332.80.

 

Your other questions:

 

Universal Credit rolls out in our area in May this year. When I advise the DWP of this lump sum pension, will they try to make me claim Universal Credit for my mum?

 

UC rollout is, well, confusing. Actually, it's a farce. But in general, you would not be expected to claim it unless entitlement to the other benefit (such as ESA) actually ends. The lump sum won't end ESA entitlement, so I don't think UC will be an issue.

 

My mum claims full Housing and Council Tax Benefit – will this be reduced in any way?

 

As long as she maintains some entitlement to income related ESA, HB will not be reduced. Council Tax Reduction will probably not be affected either but each council makes its own rules on that.

 

When the lump sum goes into my mum’s account it will pay off her overdraft, will the DWP class it as deprivation of capital or would the overdraft reduce the £4,750 approx figure over the threshold?

Can I use this money within reason, to purchase things which will make her life better? Can anyone advise of the items that would not be classed as deprivation?

 

Trickier to answer. There are no hard and fast rules for deprivation - each case is treated on its merits. So we can't say for sure what will be treated as reasonable. Paying off debts that are due would certainly be OK, but paying off debts early, perhaps not. Household repairs, yes, adaptions for a disability would almost certainly be OK too. Replacing an old wreck of a car would be fine, buying a brand new BMW - maybe not. It all comes down to what a Decision Maker sees as reasonable in the circumstances.

[antone]

Also another quick question about IB ESA and Universal Credits. UC rolls out in our area in May 2018 for new claims. My mums IB ESA is awarded until 2019 when I expect to receive her ESA50. As UC will be out in our area by then, when the ESA 50 arrives will they class it as a 'new' claim even though she is already receiving IB ESA?

 

Thanks in advance for any advice on these posts.

 

Sorry, missed this one. The answer is that as things stand, an ESA50 would not make it a new claim and so UC would not be an issue. My only slight concern is that the rules for the UC rollout keep changing, so I wouldn't like to say for sure that things will not have changed a year down the line. But for now, the WCA process does not count as ending the claim.

[joeblogs]

Thank you very much Antone for taking the time and trouble to answer all of my questions, it is very much appreciated.