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Pension Credit and pension lump sum - ** RESOLVED **


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Hi all .

I receive pension credit for myself and my wife . My wife receives a small private pension ( £62 per month ) DWP know about this . She now has the option of changing this pension into a one off lump sum in the region of £11500 ,before tax , which would be very useful to clear a few debts ( bank loan , credit cards etc in the region of £7000 . If we decided to take the lump sum how would this affect the pension credit ,would it be classed as income or savings . Thanks in advance.

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Hello and welcome to CAG.


Here's a link to a government website with sources of information. I think taking the cash value of your wife's pension less tax could also affect your pension credit. Here's a link to the website.




My best, HB

Illegitimi non carborundum




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Thanks HB , if I am reading it right it looks like it will be classed as savings , if so it will make very little difference to our PC . I'll give DWP a bell in the morning and see what they say .

Once again many thanks .

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You're welcome.


The rules are pretty new, so we're also finding out how they work.


It would be great if you're able to post up what the DWP say, please, also any other of the agencies on the link that you take advice from.



Illegitimi non carborundum




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Hi HB ,

spoke to DWP this morning .

Private pension paid monthly is counted as income so that amount is taken off any PC . Taking a lump sum is classed as savings nothing is taken unless your savings are more than £10,500 , then £1 is taken per week for every £500 above £10,500 .

They would frown upon trying to lower your savings by spending a lot , by taking lots of holidays for example , and would treat it as if you still had that money , but paying off debts is perfectly acceptable .

Thanks again HB .


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